UNIVERSITY OF CALIFORNIA LOS ANGELES SCHOOL OF LAW LIBRARY Gift of John Adams ii,jl^%ji\AJfiiJiA^^MeAAM^AMJftJiMfittili^ ^. ^ARSWELL Co., Limited j Ituokbiiiderst TOROMTO COMPANY LAW OF CANADA BY THE HON. MR. JUSTICE C. A. MASTEN. LL.D. One oi the Judges o{ the Supreme Court of Ontario AND WILLIAM KASPAR FRASER. B.A., OXON. 0{ the Toronto Bar, author of ■'Canadian Company Form.s and Precedents" Second Edition 1920 Toronto: THE CARSWELL CO., LIMITED, 145 Adelaide St. West. I.OMlON : .SWKKT & MAXWKM,, MMITKD 1U20 h Copyright, Canada, 1920, by Cornelius Arthur Masten and William Kaspar Fraser \^ PREFACE It is now nearly twenty years since tlie first edition of Masten on Company Law was published. During that period decisions on company law^ both in our own courts and . in England, have been very numerous, and extensive changes in the statute law have been enacted. The result is that, w^hile founded to some extent on the first edition, this is practically a new book, rather than a second edition. The large number of statutes, Dominion and Provincial, relating to companies present a consider- able obstacle to the satisfactory treatment of company law in Canada. Varying legislation has been enacted by each of the Provinces and by the Dominion. Tlie many points of difference between these acts, often merely verbal and requiring no comment or discussion, render it inconvenient and unsatisfactory, in the opin- ion of the authors, to adopt the plan of a general trea tise on Canadian company law drawing attention in detail to all the variations among the acts of the Dominion and the Provinces. Consequently the same plan has been adopted as in the former edition, \iz., to prepare a practical handbook noting the cases under the appropriate sections of the Companies Act, but in the present edition the Dominion Act instead of the Ontario Act has been made the basis for tbo notes. The Dominion Act has been selected, not only because of its intrinsic importance, bnl also because a very large proportion of the commercial corporations in Canada are organized under that act, *»i- under acts of a similar character such as the < )ii1ario IN' PREFACE. or otlior lottors i);itriil acts. For the convenience of Ontario praclitiouers, the Ontario Act has also been annotated with cross references to the corresponding sections of tlie Dominion Act, and with special notes where these have been thought necessary. The Authors have endeavored to refer to all Cana- dian cases which may still be law-, and, also where the importance of the topic justified it, to amplify their notes into a general discussion of the subject so as to present a working basis for the consideration of the practitioner, no matter what act he is working under. At the same time, it has been sought to make the treat- ment practical and to avoid discussions of a merely theoretical character. The book is largely the w^ork of Mr. Fraser, though some of the notes have been written, and all have been perused and revised, by Mr. Justice Masten. The Authors hope that the edition may prove a real assist- ance to the profession. June 2, 1920. CONTENTS The Dominion Companies Act, R. S. C. (1906), c. 79, and Amending Acts. Sects. Pages. 1 Short Title 1-2 Part I. Joint Stock Companies. 2 Application of Part 2-3 3 Interpretation 3-11 4 Preliminaries 11-14 5-13 Formation of New Companies 14-54 14-20 As to Existing Companies 54-56 21-23 Change of Name 56-62 24-25 Fees and Forms 62-65 26 Commencement of Business 65-68 27 Forfeiture of Charter 68-87 28-33 General Powers and Duties of the Company 88-152 34-37 Obtaining of Further Powers 152-154 38-42 Liability of Shareholders 154-172 43-430 Prospectus 173-217 44 Holding Stock of Other Companies 217-220 45-50 Capital Stock 220-264 51-57 Increase or Reduction of Capital — Reduction of Share Capital 264-274 58-63 Calls 274-308 64-68A Transfer of Shares 309-349 69-69M Borrowing Powers — Information as to Mortgages, Charges, etc 349-417 70-71 Dividends 418-436 72-79 Directors 436-462 80-81 Powers of Directors 463-505 82-86 Liability of Directors and Officers 505-512 87-88 Meetings 513-531 89-91 Books of the Company 531-534 92-94C Inspection— Auditors 534-543 95-104 Procedure 543-552 10.^)106 Statements and Returns 552-557 107-112 F^vidence 557-561 113-119 Offences and Penalties 561-563 Pabt II. Companies Clauses 563-564 VI COI^ TENTS. Part III. Pages. Loan Companies 564-565 Parts IV.-VI. 565 Schedule. Form A. Application for Incorporation under the Com- panies Act 565-566 Form B. Memorandum of Agreement and Stock Book 567 Form C. Notice of Issuing of Letters Patent 567-568 Form D. Notice of Issuing of Supplementary Letters Patent. 568 Form E. Notice of Issuing Supplementary Letters Patent In- creasing Capital 568 Form F. Statement in Lieu of Prospectus 569-570 The Ontario Companies Act, R. S, O, (1914), c. 178, and Amending Acts. Sects. Pages. 1 Short Title 571 2 Interpretation 571-577 Part I. 3-33 Incorporation, Re-incorporation, Amalgamation... 578-609 Part II. 34-42 Name of Corporation 609-612 Part III. 43 Meetings of Company 613 44-52 General meetings 613-617 Part IV. Shares, Calls. 53-62 Generally 617-620 63-71 Share Warrants 620-621 72-77 Liability of Shareholders — Execution of Trusts 621-622 Part V. 78-82 Preference and Debenture Stock, Debentures and Mortgages 622-625 Part VI. 83-98 Directors and their Powers, etc 625-632 CONTEXTS. Vll Pakt VII. Sects. Pages. 99-110 Prospectus and Directors' Liability 633-641 Part VIII. 111-117A Public Companies 641-648 Part IX. 118-134 Books, Inspection and Auditors 648-658 Part X. 135-145 Miscellaneous 658-664 Part XI. 146-152 Mining Companies 665-667 Part XI.A. Co-operative Companies ; • • • 667 Part XII. Companies Operating Municipal Franchises and Public Utilities 668 Part XIII. Winding-up of Companies 668 Part XIV. 207-210 General Provisions 668-670 Schedule ^"^^ Licenses in Mortmain 671-674 Licenses to Extra-Provincial Corporations 675-678 The Dominion "WindinK-up Act, R. S. C. (1906), c. 144, and Amendiuf; Acts. 1 Short Title 679 2-5 Interpretation 680-692 6-7 Application 693-698 VI 11 CONTENTS. Part I. General. Sf:cts. Pages. S-10 Limitation of Part 698-699 11 Wiiuliiig-up Order 699-702 12-17 Application for Order 702-726 18-19 Staying Proceedings 726-730 20-23 Effect of Winding-up Order 730-750 24-32 Appointment of Liquidators 750-757 33-38 Powers and Duties of Liquidators 757-774 39 Appointment of Inspectors 774 40-41 Remuneration of Liquidators and Inspectors 775-777 42-45 Depositing in Bank 777-778 46-47 Court Discharging Functions of Liquidator 778-779 48-60 Contributories 779-805 61-66 Meetings of Creditors 805-808 67-68 Production of Pass-books 808 69-75 Creditors' Claims 808-822 76-82 Secured Claims 822-826 83 Dividend Sheet 826 84 Liens 827-832 85-90 Contestation of Claims 832-833 91-93 Distribution of Assets 833-835 94-100 Fraudulent Preferences 836-848 101-106 Appeals 849-857 107-133 Procedure 857-878 134-135 Rules, Regulations and Forms 878 136-137 Unclaimed Deposits 879 138-143 Offences and Penalties 879-881 144-148 Evidence 881-882 Part II. 149-159 Banks 882-884 Part III. 160-173 Life Insurance Companies 885-889 Part IV. 174-188 Other than Life Insurance Companies 889-892 TABLE OF CASES A. A-Alb '-'^''^ A Company, Re (1917) 34 D. L. R. 396; 27 Man. L. R. 540... ^^^ Aaron's Reefs v. Twiss (1896) A. C. 273 194, 297, 790 Abbott Mitchell, Re (1901) 2 0. L. R. 143 690, 704 Aberdeen Railway v. Blakie (1854) 1 Macq. H. L. 461 4/b Abitibi Power v. Smart (1914) 20 D. L. R. 977 337 Abrath v. N. E. Ry. Co. (1886) 11 App. Cas. 247 149 Abrey v. Victoria Printing Co. (1912) 21 0. W. R. 444 195 Acadia. Re (1918) 3 W. W. R. 477 294 Acadia Loan Corporation v. Wentworth (1884-1907) 40 N. S. R. r..- 237 5.i:o Acer V. Percy (1903) 5 Que. P. R. 401 294 Accles, Ltd., In re (1902) 51 W. R. 57 401 Acland v. Lewis (1860) 30, L. J. C. P. 29 48 Acton Tanning Co. v. Toronto Suburban Ry. (1918) 56 S. C. R. 196 141, 145 Adair v. British Crown Co. (1915) 24 D. L. R. 905 236, 439 Adam's Case (1872) L. R. 13 Eq. 474 787 Adams V. Bank of Montreal (1899) 8 B. C. R. 314; (1901) 32 S.C.R.719 366.484, 837 Adams v. McCall, 25 U. C. R. 219 841 Adams v. Thrift (1915) 2 Ch. 21 • 189 Addin«ll's Case (1865) L. R. 1 Eq. 225 787, 789 Addison's Case (1870) L. R. 5 Ch. 294 330 Addison's Case (1875) L. R. 20 Eq. 620 805 Addlestone Linoleum Co., In re (1887) 37 Ch. D. 191 734, 793 Adjustable Horse Shoe Company, Re (1890) W. N. 157 723 African Farms, Ltd., Re (1906) 1 Ch. 640 707 African Gold Concessions and Development Co., In re (1899) 2 Ch. 480 793 A.-G. V. Great Eastern Ry, L. R. 5 App. Cas. 473 121 A.-G. of Canada v. A.-G. of Ontario (1894) A. C. 189 679 A.-G. for Dominion of Canada v. A.-G. for Province of Ontario (1898) A. C. 700 679 A.-G. for Ontario v. Railway Passengers Assurance Co. (1918) 43 0. L. R. 108 99 A.-G. v. N. Y. Breweries (1898) 1 Q. B. 205; (1899) A. C. 62 .... 346 A.-G. V. Standard Trust (1911) A. C. 498 208, 467, 478, 515 Aggs V. Nicholson (1856) 1 H. & N. 165 466 Agra, etc.. Bank. Re (1867) L. R. 2 Ch. 397 383 Agricultural Cattle Insurance Co., In re (1876-7) 4 Ch. D. 34n.. 403 Agricultural Hotel Co.. In re (1891) 1 Ch. 396 271 Aikens v. Waugh (1919) 16 0. W. N. 390 637 Alabaster's Case (1869) 7 Eq. 273 787 Albert Average Association, Re (1870) 5 L. R. Ch. 597 752 Albert Cheese Co. v. Learning (1880) 31 C. P. 272 130 Albert Life Assurance Co., In re (1871) L. R. 6 Ch. 381 77 Albert Mining Co.. In re (1873-5) 15 N. B. R. 29 257 9 X TABLE OF CASES. Alb — Aug I'AtiK Alberta Improvement Co. v. Peverett (191 ») 7 D. L. R. 314; (1914-5) 7 W. W. R. 757 224, 284 Alberta Ornamental Iron Co. and Imperial Bank, Re (1917) 35 W. L. R. 126 813 Alberta Rolling Mills v. Christie (1919) 45 D. L. R. 545; (1919) 58 S. C. R. 208 231, 232, 240, 246, 247, 248, 307 Albion V. Martin (1875-6) 1 Ch. D. 580 475 Albion Iron Works. Re (1901-4) 10 B. C. R. 351 722 Alexander v. Automatic (1899) 2 Ch. 302; (1900) 2 Ch. 56. 278, 279, 469 Alexander v. Simpson (1889) 43 Ch. D. 139 516, 517 Alexander Park Co.. Re (1866) W. N. 231 132 Alexandra Oil and C. Co. v. Cook (1908) 11 0. W. R. 1054; (1909) 13 O. W. R. 405 ; 14 O. W. R. 604 209 Alexandra Palace Co., Re (1883) 23 Ch. D. 297 805 Algoma Commercial Co., Re (1904) 3 0. W. R. 140 721 Allan V. Clarkson (1870) 17 Gr. 570 839, 842 Allan V. Manitoba and Northwestern (1894) 10 Man. L. R. 106 408, 409 Allen V. Gold Reefs (1900) 1 Ch. 656 288, 516 Allen V. Hanson (1890) 18 S. C. R. 667 682, 694, 696 Allen V. Hyatt (1914) 17 D. L. R. 7 468, 480 Allen V. Ontario and Rainy River Ry. Co. (1898) 29 0. R. 510 439, 461, 550 Alley V. Trenholme (1893) Que. 3 S. C. 163 447 Allner v. Lighter (1913) 13 D. L. R. 210 815 Alma Spinning Co., Bottomley's Case (1880) 16 Ch. D. 681.. 284, 436 Almada and Tirito Co. (1888) 38 Ch. D. 415 157, 793 Almon V. Law (1894) 26 N. S. R. 340 144, 482 Almon V. Oppert (1901) 2 K. B. 576 188 Alpha Mortgage, etc., Co., Re, 22 B. C. R. 513 829 Alpha Oil Co., Re (1887) 12 P. R. 298 720, 751, 807, 884 Amalgamated Syndicate, In re (1897) 2 Ch. 600 702 Amarduct v. General Incandescent Co. (1911) 2 K. B. 143 747 Ames' Case ( 1896 ) W. N. 79 789 American Pioneer Leather Co., In re (1918) 87 L. J. Ch. 493... 701 American Tire Co., Re (1903) 2 0. W. R. 29 816 Ammonia Soda Co. v. Chamberlain (1918) 87 L. J. Ch. 193; (1918) 1 Ch. 266 339, 424, 425 Anchor Investment Co., Re (1912) 7 D. L. R. 915 682, 685, 687 Anderson's Case (1877) 7 Ch. D. 75 794, 798 Anderson, Re (1877-8) 2 A. R. 24 761 Andreae v. Zinc Mines (1918) 2 K. B. 454; 87 L. J. K. B. 1019. . 155, 636 Andress's Case (1878) 8 Ch. D. 126 796 Andrew's Case (1868) L. R. 3 Ch. 161 783 Andrews v. Gas Meter (1897) 1 Ch. 361 253 Andrews v. Mockford (1896) 1 Q. B. 372 203 Andrews v. Swansea (1880) 50 L. J. Q. B. 428 743 Andrews Bros. v. Youngston, 86 Fed. Rep. 585 6 Angel v. Jay (1911) 1 K. B. 666 195 Anger v. Corneillier (1891) R. J. Q. B. 293 216 Anglesea Colliery Co., In re (1886) L. R. 1 Ch. 555 , • • 684 Anglesea Colliery Co., Re (1867) L. R. 2 Eq. 379; 1 Ch. 555 805 TABLE OF CASES. XI Ang-Atl '''^''^ \nglo-American Fire Insurance Co. (No. 1), Re (1919) 16 O. W. N. 149 ^^^ 4nglo-American Lumber Co. v. McLellan (1908) 13 B. C. R. 318; (1908) 14 B. C. R. 93 156, 236. 237 Anglo-Austrian Co. Re (Isaac's Case) (1892) 2 Ch. 158 • 499 Anglo-Austrian v. British, etc., Co.. 3 Giff. 521; 4 DeG. F. & J. 341 °^^ Anglo-Bavarian Steel Ball Co. (1899) W. N. 80 ^^08 Anglo-Colonial Syndicate, In re (1892) 65 L. T. 847 794 Anglo-Continental Co., In re [1898] 1 Ch. 327 «^J Anglo-Danubian Steam Co. (1875) L. R. 20 Eq. 339 ^'9 Anglo-French Society, Re (1882) 21 Ch. D. 501 • — ^^J Anglo-Greek Steam Co., Re (1866) L. R. 2 Eq. 1 '09, 7ZZ Anglo-Italian Bank v. Davies (1878) 9 Ch. D. 275 «^^ Anglo M. Co., Re (1876) 24 W. R. 128 l<^ Anglo-Mexican Land (1875) W. N. 168 ^"i Anglo-Moravian Co., Re (1875) 1 Ch. D. 130 7^4 Angus V. Clifford (1891) 2 Ch. 449 J^^ Anthony v. Seger (1789) Hagg. Con. Cas. 9 »^o Appleyard, Ex. p. (1871) 18 Ch. D. 587 79b Archibald V. Haldon, 30 U. C. Q. B. 30 ^J^ Arden, Re (1884) 14 Q. B. D. 121 ^A Armour v. Gates (1859) 8 U. C. C. P. 548 l*» Armitage v. Garnett (1893) 3 Ch. 337 • • • • • • • 43/ Armstrong v. McGibbon (1906) Q. R. 15 K. B. 345 . .457. 458, 526, 531 Armstrong v. Merchants' Mantle, etc., Co. (1901) 32 O. R. 387. 172, 290, 300 301 Armstrong v. Portage, etc., Co. (1884) 1 M. R. 344 128 Armstrong v. Watson (1919) 45 D. L. R. 501 814 Army and Navy Co., Re, Jan. 11, 1898 (unreported) 745 Army and Navy Clothing Co., Re (1902) 3 O. L. R. 37 . .754, 757, 860 Arnold V. Dominion Trust Co. (1918) 56 S. C. R. 433 857 Arnold Chemical Co., Re (1901) 2 O. L. R. 671 4, 705 Arnot's Case (1887) 36 Ch. D. 702 5o8, 787 Arnot V. United African Lands. Limited (1901) 1 Ch. 518 527 Arthur Average Association, Re (1876) 3 Ch. D. 522; (1875) 10 Ch. 542 ^^J Artistic Colour Printing Co., In re (1880) 14 Ch. D. 502 726 Ashbury v. Riche (1875) L. R. 7 H. L. 653 101, 103, 121, 373 Ashbury v. Watson (1885) 30 Ch. D. 376 253, 333, 431, 432 Ashdown Hardware Co. v. Residential Building Co. (1914-5) 7 W. W. R. 690 '^^^ Asphaltlc Wood Pa\4ement Co., Re (Lee & Chapman's Case) (1885) 30 Ch. D. 21G '^^^ Assiniboia Land Co. v. Acres (1916) 10 O. W. N. 328 o99 Assiniboine Valley Stock, etc.. Co., Re (1889) 6 M. R. 105 756 Assiniboine Valley Co., Re (1889) 6 M. R. 184 776 Association of Land Financiers, Re (1878) 10 Ch. D. 269 752 Astley V. New Tivoli (1899) 1 Ch. 151 449, 870 Athenaeum, etc., Society v. Pooley, 1 Giff. 102; (1858) 3 De G. & J. 294 382. 383 Atkinson. In re (1904) 2 Ch. 160 433 Atlas Canning Co.. In re (189.5-97) 5 B. C. R. 661.... 687, 704. 706, 707, 713, 715 Xll TABT.E OF CASES. Atl— Bai I'A*;].: Atlas Loan Co.. Re (1904) 7 O. L. R. 706 809 Atlas Loan Company, Re, Elgin Loan Co.'s Claim (1905) 9 O. L. R. 250 218 Atlas Loan. Ex p. Green. Re. (1903) 30 C. L. T. 366 291, 781 Atkin & Co. v. Wardle (1889) 61 L. T. 23 151 Atkinson v. Brindall, 2 Bing. N. C. 225 843 Attorney-General for Canada v. Attorneys-General for Alberta. Manitoba, etc. (1916) 85 L. J. P. C. 124; (1916) 1 A. C. 588; 26 D. L. R. 288 26. 56 Attorney-General v. Bergen (1896) 29 N. S. 135 72 Attorney-General v. G. E. Ry. (1879) 11 Ch. D. 449 88 Attorney-General v. Gould (1860) 28 Beav. 485 523 Attorney-General v. Great Nortbern Ry. (1860) 1 De & Sin. 154. 50 Attorney-General v. Niagara Falls & Clifton R. Co. (1891) 18 A. R. 453 547 Attorney-General v. The Niagara Falls International Bridge Co. (1873) 20 Gr. 34 105 Attorney-General v. Mersey Railway (1907) 1 Cb. 81; (1907) A. C. 415 100 Attorney-General for Canada v. Standard Trust Co. of New York (1911) A. C. 498 208, 467, 478, 515 Attorney-General v. Toronto Junction Recreation Club (1904) 8 0. L. R. 440 14, 87, 547 Attorney-General v. Vaughan Road Co. (1892) 19 A. R. 234; 21 S. C. R. 631 547 Atwood V. Merry weather (1868) L. R. 5 Eq. 464 523 Audley Hall Cotton Spinning Co., Re (1868) L. R. 6 Eq. 245.722, 724 Ault & Wibourg, Ex p. (1914) 48 N. B. R. 548 560 Austin's Case (1871) 24 L. T. 932 284 Austin Mining Co. v. Gemmell (1886) 10 0. R. 696 444, 447, 461, 475, 514, 515, 520 Australian Direct Steam Navigation Co., In re (1875) L. R. 20 Eq. 325 742,745 Australian Estates and Mortgage Co., In re (1910) 1 Ch. 414 .. 273 Automatic Self Cleansing, etc. v. Cunningham (1906) 2 Ch. 34. 481 Auto Top, etc., Co., Ltd., Re (1916) 10 0. W. N. 76, 129 765 Ayers v. South Australian, etc., Co. (1871) L. R. 3 P. C. 548 ... 93 B. Baden Machinery Co. (1606) 12 O. L. R. 634 722, 724 776. 834 Baglan Hall Co., Re (1870) L. R. 5 Ch. 346 41, 42, 793, 797 Bagot Pneumatic Tyre Co. v. Clipper, etc., Co. (1902) 1 Ch. 146. 119 Bagshaw v. Eastern Union R. Co. (1849) 7 Hare 114 522, 523 Baie des Chaleurs v. Nantel (1896) Q. R. 9 S. C. 47; Q. R. 5 Q. B. 64 679 Bailey Cobalt, Re (1919) 17 0. W. N. 228 852 Bailey Cobalt, Re (1915) 8 O. W. N. 433 765 Bailey Cobalt Mines, Ltd., Re (1919) 44 O. L. R. 1 818 Bailey Cobalt Mines v. Benson (1918) 43 O. L. R. 321 855 Baillie's Case (1898) Ch. 110 250 Baily's Case (1868) L. R. 3 Ch. 592 786 Bain v. Anderson (1897) 27 0. R. 369 119, 143 Baine"s Case (1888) 16 0. R. 293; 16 A. R. 237 788 TABLE OF CASES. Xlll Bai — Bar page Bainbridge v. Smith (1889) 41 Ch. D. 470 446 Baird's Case (1870) L. R. 5 Ch. 725 319 Baldwin v. Bawden (1912) G D. L. R. 520 543 Bale V. Cleland (1864) 4 F. & F. 117 419 Balfour v. Ernest (1859) 5 C. B. N. S. 624 102, 144 Bangor Slate Co., Re (1875) L. R. 20 Eq. 59 805 Bank of Africa, Limited v. Salisbury Gold Mining Co., Ltd. ( 1892) A. C. 281 325 Bank of Australasia, The, v. Harris, 15 Moo. P. C. 97 841 Bank of Australia (1895) 1 Ch. 578 696 Bank of Australia v. Earl, 13 Peters p. 589 121 Bank of Bombay. The. v. Suleman Sonji (1908) 24 T. L. R. 698. 534 Bank of British North America v. Howley, 14 Que. S. C. 422 548 Bank of England v. Cutler (1908) 2 K. B. 208 344 Bank of Hamilton v. Johnston (1906) 7 0. W. R. Ill 249 Bank of Hamilton v. Kramer Irwin (1912) 1 D. L. R. 475. 691, 731, 766 Bank of Hindustan v. Allison (1870) L. R. 6 C. P. 54 48 Bank of Hochelaga v. Garth (1886) 2 M. L. R. (S. C.) 201 731 Bank of Hochelaga v. Masson (1884) 1 M. L. R. 62 857 Bank of Liverpool, Re (1889) 22 N. S. 97 807 Bank of Liverpool, Re (1889) 22 N. S. 97; (1891) 18 S. C. R. 707 883 Bank of Montreal v. Delatre (1848) 5 U. C. Q. B. 362 148 Bank of Montreal v. Kirkpatrick (1901) 2 0. L. R. 119 396 Bank of Montreal v. MacWhirter (1867) 17 C. P. 506 838 Bank of Montreal v. Maritime Sulphide Fibre Co. (1901) 2 N. B. Eq. 328 412 Bank of Nova Scotia v. Forbes (1883) 16 N. S. 4; Russ & Geld. 295 286 Bank of Nova Scotia v. McKinnon (1892) 12 C. L. T. 178 548 Bank of Ottawa v. Hamilton Stove and Heater Co. (1918) 15 0. W. N. 152; (1919) 44 0. L. R. 93 91, 105 Bank of Ottawa v. Jones (1919) 46 D. L. R. 407 164, 235, 666 Bank of South Australia v. Abrahams (1875) L. R. 6 P. C. 265.. 364 Bank of Syria, Owen & Ashforth's Claim, In re (1901) 1 Ch. 115 368, 436 Bank of Toronto v. Cobourg, etc., Ry. Co. (1884) 7 O. R. 7 376 Bank of Toronto v. Cobourg, etc., Ry. Co. (1885-6) 10 0. R. 376. 467, 468 Rank of Toronto v. Lanibe, 56 L. J. P. C. 81; 12 App. Cas. 757.. 97 Bank of Toronto v. Pickering (1919) 17 0. W. N. 161 548 Bankers Trust Co. and Barnsley (1915) 21 D. L. R. 623, 21 B. C. R. 130 250, 254, 792 Bankers Trust v. Okell (1916) 27 D. L. R. 63 250 Banksea Island Co., Ex parte Bentick. In re (1888) 1 Meg. 23 C. A 321 Bannatyno v. Direct Spanish Telegraph Co. (1887) 34 Ch. D. 287 271 , 524 I!;iiK|uc d'Exfhange and Darling. Re (1884) 16 R. L. 649 756 Baiuiue d'Hoclielaga v. .Murray (1890) 15 A. C. 414 13. 73. 546, 547 BaiKiue St. Joan. Re (1908) 10 Quo. P. R. 223 730. 781 Barber, Re (1851) 15 Jur. 51 789 x'n- TABLE OF CASES. Bai^Bea i'"-K Barber. Ex p. (1849) 1 Mac. & G. 176 730 Barber. Re (1852) 15 Jur. 51 228 Barber. Re (1886) 34 Ch. D. 77 474 Bardwell v. Sheffield Waterworks Co. (1872) L. R. 14 Eq. 517... 419 Bargate v. Shortruige, 5 H. L. Cas. 297 138, 489 Barnard v. Desautels (1909) Q. R. 19 K. B. 114 327 Barnard v. Duplessis Independent Shoe Machinery Co. (1907) Q. R. 31 S. C. 362 327 Barned's Banking Co., Re, 18 W. R. 944 824 Barned's Banking Co., Re (1867) 36 L. J. Ch. 215 803, 804 Barned's Banking Co. (1867) L. R. 3 Ch. 105 36, 789 Barned's Banking Co., Ex parte Contract Corporation, In (1867) L. R. 2 Ch. 350 "^^7 Barnetfs Case (1874-5) 19 Eq. 449 819 Barnett, Re (1874) 9 Ch. App. 293 818 Barnett, Ex p.; Re Ipswich Ry. Co. (1849) 1 DeG. & Sm. 744. .. . 715 Barnett'v. South London Tramways (1887) 18 Q. B. D. 815 146 Baroness Wenlock v. River Dee Co. (1887) 36 Ch. D. 675 n; 10 App. Cas. 354 49, 101, 360 Baroness Wenlock v. River Dee Co. (1887) 19 Q. B. D. 155.. 103, 374 Barrett's Case (1865) 13 W. R. 559 819 Barrett's Case (1864) 4 D. J. & S. 416 167 Barrett v. Bank of Vancouver (1917) 36 D. L. R. 158 246, 247, 249, 784 Barrow's Case (1880) 14 Ch. D. 432 796, 798 Barrow-in-Furness Co. (1870) 14 Ch. D. 40O 795 Barthels v. Winnipeg Cigar Co. (1909) 2 Alta. L. R. 21 ....358, 369 Bartless v. Amherstburg (1856) 14 U. C. R. 152 127 Bartlett v. Bartlett Mines, Ltd. (1911) 24 0. L. R. 419. .254, 503, 505 Bartlett v. Town of Amherstburg, 14 U. C. R. 152 122 Barton's Case (1859) 4 Drew 535 294 Barton's Trust (1888) L. R. 5 Eq. 238 433 Barton v. North Staffordshire Railway Co. (1888) 38 Ch. D. 458. 346 Barton-upon-Humber, etc., Co., Re (1889) 42 Ch. D. 585 697 Bartram v. Birtwhistle (1903) 15 0. L. R. 634 501 Barwick v. English Joint Stock Bank (1867) L. R. 2 Ex. 259.149, 548 Bateman v. Ashton-under-Lyne Corporation (1858) 3 H. & N. 323. 119 Bath's Case (1878) Ch. D. 334 103. 482, 795 Batten v. Wedgewood, etc., Co. (1884) 28 Ch. D. 317 724 Batten v. Wedgewood Coal Co. (1885) 31 Ch. D. 346 776 Baur V. ^tna Life, 20 O. R. 6 8 Baxter v. Brown (1845) 7 M. & G. 198 48 Baxter v. Central Bank (1891) 20 O. R. 214 737, 759, 871 Baxters. Ltd., Re (1898) W. N. 60 728 Baynes Carriage Co., Re (1913) 7 D. L. R. 257; 27 0. L. R. 144. 706, 878 Baynes Carriage Co., Re (Decision No. 2) (1913) 8 D. L. R. 309. 708 B. C. Permanent v. Wooton (1899) 6 B. C. R. 382 60 B. C. Portland Cement Co., Ltd., Re (1915) 22 D. L. R. 609; (1916) 27 D. L. R. 726 372, 417 B. C. Portland Cement Co., Re (1915) 31 W. L. R. 398 383 Beaston v. Farmer's Bank. 12 Peters 102 526 Beattie v. Lord Ebury (1872) 7 Ch. 777 192, 361, 496 Beattie v. Lord Ebury (1874) L. R. 7 H. L. 102 3bl TABLE OF CASES. XV Bea— Bir page Beattie v. Wenger (1897) 2-1 A. R. 72 842. 844 Beatty v. Neelon (1885) 12 A. R. 50, 13 S. C. R. 1 194, 195 Beaubien v. Corticelli Co. (1912-13) 14 Que. P. R. 194 777 Beaucage v. Winnipeg Stone Co. (1910) 14 W. L. R. 575 144 Beauchemin v. Richelieu Foundry Co. (1908) Q. R. 34 S. C. 261. 322, 337 Beaudry v. Read (1907) 10 O. W. R. 622 482, 492, 502, 503 Becher v. Corporation of Amherstburg, 23 U. C. C. P. 602 378 Becher v. Woods (1865) 16 U. C. C. P. 29 110 Bechtel v. Zinkan (1907) 10 O. W. R. 1075 169 Bechuanaland Exploration Co. v. London Trading Bank, Ltd. (1898) 2 Q. B. 658 383 Beck's Case (1874) L. R. 9 Ch. 392 789 Belanger v. Union Abitibi Mining Co. (1917) 32 D. L. R. 700, 25 Que. K. B. 376 851 Belch V. Manitoba (1887) 4 M. R. 199 131 Belding Lumber Co., Ltd., Re (1911) 23 O. L. R. 255. . . .706, 707, 720, 721. 729, 851, 854, 856, 878 Bell's Case (1879) 4 App. Cas. 550 330 Bell V. Black (1882) 1 0. R. 125 229 Bellerby v. Rowland (1902) 2 Ch. 14 305, 306, 308 Belleville Driving and Athletic Association, Re (1914) 31' 0. L. R. 79 113, 326, 327, 328 Banner v. Currie, 36 U. C. R. 411 165 Bennett v. Havel ock Electric Light and Power Co. (1910) 21 0. L. R. 120 207. 208, 480 Bennett v. Havelock (1910) 21 0. L. R. 120; (1912) 25 0. L. R. 200 478 Benor v Canadian Mall Order Co. (1907) 10 0. W. R. 899. 1091. 462, 504 Benson v. Heathorn (1842) 14 Y. & C. Ch. 326 475 Bent V. Arrowhead (1909) 18 Man. L. R. 633 134, 142. 482 Bentley's Case. 12 Ch. D. 851 795 Bergeron v. Jonqui^re (1913) 22 Que. K. B. 341 204, 224, 225 Bernardin v. Municipality of North Dufferin (1891) 19 S. C. R. 5gl 106, 122, 370 Bibby Ex parte. Enterprise Mining Co.. Re (1884) 1 B. C. R. 11 315 Bickford v. Grand Junction R. Co. (1877) 1 S. C. R. 730. 360, 365, 370 Blggerstaff v. Rowatt's Wharf (1896) 2 Ch. 93 135, 138. 377 Binney v. Ince Hall Coal Co. (1886) 35 L. J. Ch. 363 261 Birch v. Cropper (1889) 14 App. Cas. 525 221, 805, 835 Bird. In re (1901) 1 Ch. 916 434 Bird's Case (1864 ) 4 D. J. & S. 200 241 Bird V. Bird's Patent, etc.. Co. (1874) L. R. 9 Ch. 358 526 Bird V. Hussey Ferrler (1913) 5 0. W. N. 60 142 Birbeck Life, Re. Ex parte Barry (1865) 2 Dr. & Sm. 321, 13 W. R. 380 783 BirkbPfk Loan Co. v. Johnston (1902) 3 O. L. R. 497; (1903) C n. L. R. 2.^,8 262, 340 Birmlnt,'hani v. Sheridan (1864) 33 Beav. 660 338 Birmingham Banking Co., Ex parte (1868) L. R. 3 Ch. 651 490 Birmingham Brewing Co., Re (1883) 52 L. J. Ch. 358 754 Blrney v. Toronto Milk Co. (1903) 5 0. L. R. 1 131. 503 XVI TABLE OF CASES. Bis Bou I'AGE Bishop's Case (ISGit) L. K. 7 Ch. 209 ii 334 Bishop V. Balkis Co. (1890) 25 Q. B. D. 512 798 Bishop V. Smyrna L1895J 2 Ch. 2G5 805 Bishop. E. & Sous, Limited, Re (1900) 2 Ch. 354 710, 712 Bishop Construction Co., Ltd., Re (1914) 15 D. L. R. 911.... 229, 768 Bishop Engraving and Printing Co., Re; Ex parte Howard (1887) 4 Man. R. 429 • 225, 787, 788 Blacks Case (1872-3) 8 Ch. 254 819 Black V. Fountain (1876) 23 Gr. 174 838 Blackburn Benefit Building Society v. Cunliffe Brooks (1882) 22 Ch. D. 61; (1884) 9 App. Cas. 857 103 Black V. Carson (1913) 7 D. L. R. 484; (1917) 36 D. L. R. 772 (P. C.) 112 Black V. Homersham (1878) 4 Ex. D. 24 419 Blackpool Motor Car Co., In re (1901) 1 Ch. 77 810 Blackstone, Ex p. (1867) 16 L. T. 273 790 Blair Open Hearth Furnace Co., In re (1914) 1 Ch. 390 183 Blals V. Bankers' Trust Corporation (1913) 14 D. L. R. 277. .736, 738 Blais V. Bankers' Trust Corporation (1913) 25 W. L. R. 653 872 Blakely Ordinance, Re (1867) L. R. 3 Ch. 154 383 Blisset V. Daniel (1853) 10 Hare 483 294, 470 Bloomenthal v. Ford (1897) A. C. 156 149, 171, 798 Bloxam's Case (1864) 33 Beav. 529 787 Bloxham v. Metropolitan Ry. Co. (1868) L. R. 3 Ch. 337 424 Blue V. Gas and Water Co. (1849) 6 U. C. Q. B. 174 130 Blyth's Case (1876) 4 Ch. D. 140 794, 796, 798 Bodega Co. (1904) 1 Ch. 276 450 Boeckh v. Gowganda (1911) 24 0. L. R. 293; (1912) 46 S. C. R. 645 . . 202 Bohammon v. Binns. 31 Miss. 355 69 Bolt and Iron Co., Re (1884) 10 P. R. 434 225, 230, 233. 485, 769, 772, 783, 788, 878 Bolt and Iron Co., Re. Livingstone's Case (1887) 14 0. R. 211; (1889) 16 A. R. 397 500. 526, 865, 867, 870 Bombay v. Shroff (1905) A. C. 213 S29 Bonanza Creek, etc., Co. v. The King (1916) 1 A. C. 566 27, 56, 88, 121, 361, 373 Bond v. Barrow Haematite (1902) 1 Ch. 353 419, 426, 435 Bonisteel v. Collis Leather Co. (1919) 45 0. L. R. 195 234, 269 Bonner v. Moray (1914) 23 Que. K. B. 252 316 Booth V. Afrikander (1903) 1 Ch. 295 185 Borax Co., In re (1901) 1 Ch. 326 393 Borland's Trustee v. Steel Brothers & Co. (1901) 1 Ch. 279 311 Borough of Portsmouth Tramways (1892) 2 Ch. 362 408, 696, 697, 712 Boschoek v. Fuke (1906) 1 Ch. 148 446, 518 Boston Rubber Co. v. Boston Rubber Co. of Montreal (1902) 32 S. C. R. 315 ^1 Boston Shoe Co., Re (1914) 16 D. L. R. 856 833, 870 Boston Shoe Co. v. Frank (1914) Que. 48 S. C. 66 473, 489 Boston Wood Rim Co., Re (1904) 5 O. W. R. 149 829 Bouch, Re (1885) 29 Ch. D. 659 ^^^ Bouch V. Sproule (1887) 12 App. Cas. 385 ' 433 Boulet V. Houdon (1917) 51 Que. S. C. 29 237 TABLE OF CASES. XVll Bon — Bri page Boultbee's Case (1889) 16 A. R. 508 223 Boultbee v. Gzowski (1898-99) 29 S. C. R. 54 559 Boultbee v. Wills (1911) 15 O. L. R. 227 336 Bourne v. Freath, 9 B. & C. 632 6 Bourbeau Co. v. Stewart Macdonald Export Co. (1917) Que. 26 K. B. 315 824 Bowes V. Hope M. Life Insurance Co. (1865) 11 H. L. C. 389.709, 713 Bowling's Contract, Re (1895) 1 Ch. 663 850 Boyd V. The Bank of New Brunswick (1891), N. B. Equity Case 546 263 Boyle, Ex p. (1885) 33 W. R. 450 1 787 Boyle V. Rothschild (1907) 10 0. W. R. 696 470 Box V. Bird's Hill Sand Co. (1912) 8 D. L. R. 768; (1913) 12 D. L. R. 556; 23 Man. L. R. 15 324, 824 Bradford Navigation Co., In re (1870) 5 Ch. 600 720 Brady v. Stewart (1887) 15 S. C. R. 82 299, 335 Brail, In re [1893J 2 Q. B. 381 839 Brampton Gas Co., Re (1902) 4 O. L. R. 509 410, 824 Brandon Coi^struction Co. v. Saskatoon School Board (1912) 5 D. L. R. 754; (1913) 13 D. L. R. 379 130, 141, 143 Branksea Island Co., Re, 1 Meg. C. R. 12 557 Braunstein v. Marjolaine (1914) 58 Sol. J. 755 409 Brayley v. Ellis, 10 0. R. 119 841 Brazilian Rubber Co., Ltd. In re (No. 1) (1911) 1 Ch. 425 ..493, 495 Bread, etc.. Association, Re (1893) 68 L. T. 434 787 Breakwater Co., Re (1914) 33 0. L. R. 65 694, 695, 696 Breese v. Knox, 24 A. R. 203 842 Bremmer, Ltd., Alex. v. Dominion Floor and Wall Tile Co., Ltd. (1915) 17 Que. P. R. 278 685, 690 Brenes & Co. v. Downie (1914) S. C. 97— Ct. of Sess 497 Brentford & Isleworth Tramway Co., Re (1884) 26 Ch. D. 527.. 696 Brewery Assets Co., Trueman's Case (1894) 3 Ch. 272 236 Brewster v. Canada Iron (1914) 7 O. W. N. 128 740, 871 Brice v. Munro (1885) 12 A. R. 453 161, 547 Bridger's Case (1870) 5 Ch. App. 305 246, 789 Bridgewater Cheese Factory v. Murphy (1894) 26 0. R. 327; 23 A. R. 66; (1896) 26 S. C. R. 443 133, 144, 359. 374, 485 Bridgewat«r Navigation Co. (1891) 2 Ch. 317 433, 805 Briggs, Ex p. (1866) L. R. 1 Eq. 483; 35 Beav. 273 790 Brigman v. McKenzie, 6 B. C. R. 56 764 Brighton Club, The (1865) 35 Beav. 204; 11 Jur. N. S. 436 713 Brighton Hotel Co.. Re (1868) L. R. 6 Eq. 339 712 Brinsley. Ex p. (1866) 36 L. J. Ch. 150 533 Brinsmoad & Sons. Thomas Edward (1897) 1 Ch. 45 701 Bristol Athenaeum. Re (1890) 43 Ch. D. 236 697 British Empire Co., Re (1888) 59 L. T. 291 788 British Joint Stock Bank, Re (1890) 38 W. R. 576 686 British .Allinnro As.surance Corporation, Re (1877) W. N. 261.. 712 British American Trustee Corporation v. Couper (1894) A. C. 399 271, 308 British Athenarum, Re (1890) 43 Ch. D. 236 682 British Canadian Lumbering and Timber Co. v. Grant (1887) 12 P. R. 301 769, 802 D.C.A. — B will TABLE OF CASES. Bri- Bue pack British Cattle Supply Co.. Re. McHugh's Case (1919) 16 0. W. N. GL'. 1H)6 169, 230 British Columbia Electric Railway, In re (1899) W. N. 260 793 British Columbia Iron Works. Co., Re (1898) 5 B. C. R. 53G 694 British Columbia Pottery Co.. Re (1895) 4 B. C. R. 525 824 British Columbia Tie and Timber Co., In re (1908) 14 B. C. R. 81 411, 738 British Consolidated Oil Corporation (1919) 88 L. J. Ch. 260 ... 401 British Electric Tramways Co., In re (1903) 1 Ch. 725 723 British Farmers' Co. (1878) 7 Ch. D. 533 329 British India Steam Navigation Co. v. Commissioners of Inland Revenue (1881) 7 Q. B. D. 165 377, 378 British Imperial Corporation, Re (1877) 5 Ch. D. 749 802 British Linen Co. v. South American and Mexican Co. (1894) 1 Ch. 108 761 British Murac Syndicate v. Alperton (1915) 2 Ch. 186 452 British Nation Life Assurance Association, Re (1872) 14 Eq. 492 720, 756 British Nation, etc.. Association, Ex p. (1878) 8 C. D. 679 36 British Provident v. Anglo-Australian Co., 10 L. T. 326 810 Briti.sh Seamless Paper Box Co., Re (1881) 17 Ch. D. 467 208 British South Africa Co. v. De Beers, 79 L. J. Ch. 345 00 British Sugar Refining Co. (1857) 3 K. & J. 408 284, 516, 517 Briton Medical Assurance Association, Re (1886) 32 Ch. D. 503. . 742 Briton Medical and General Life Association, Limited, Re (2) (1886) 12 O. R. 441 695 Briton Medical Re (2) (1886) 11 0. R. 478 685. 687, 690 Broad Street Co. (1887) W. N. 149 795 Brocas v. Lord Mayor of London (1766) 1 Stra. 307 559 Brock v. Ruttan (1851) 1 U. C. C. P. 218 320 Brodeur Company v. Merrill (1917) 26 Que. K. B. 461 830 Brogdin v. Bank of Upper Canada (1867) 15 Gr. 544 524 Brookes v. Hansen (1906) 2 Ch. 129 186 Brooks V. Taylor (1876) 26 C. P. 443 837 Brown's Case (1873) L. R. 9 Ch. 102 787 Brown, Bayley & Dixon, Re (1881) 18 Ch. D. 649 749 Brown v. Cadwell (1918) 2 W. W. R. 229 S52 Brown v. Corporation of Belleville (1870) 30 U. C. R. 373 124 Brown v. Coughlin (1914-5) 50 S. C. R. 100 810, 821, 826 Brown v. Dale (1878) 9 Ch. D. 78 805 Brown v. Gregory (1904) 1 Ch. 627; (1904) 2 Ch. 447 385 Brown v. Rowland (1885) 9 0. R. 48; 15 A. R. 750 496 Brown v. Lindsay (1874) 35 U. C. Q. B. 509 128 Brown v. Menzies Bay Timber Co. (1917) 34 D. L. R. 452 522 Browne v. La Trinidad (1888) 37 Ch. D. 1 120. 487 Brovne v. Monmouthshire Co. (1851) 13 Beav. 32 . ; 418 Brownlee v. Hyde (1906) Que. 15 K. B. 221 247, 249 Bryant v. Banque du Peuple (1893) A. C. 170 133, 142, 145 Bryant v. Quebec IBank (1893) A. C. 170 142 Buchanan, Ex p. (1866) 15 W. R. 99 864 Buchan's Case (1879) 4 App. Cas. 588 319 Buckley's Case [18991 2 Ch. 725 842 Buenos Ayres Co. (1875) W. N. 59 794 TABLE OF CASES. XIX Buf — Can PAGE Buff Pressed Brick Co. v. Ford (1915) 33 O. L. R. 264; 8 0. W. N. 63 196, 202, 204, 225 Buffalo, etc., Ry. v. Carey, 26 N. Y. 75 69 Buffalo, Brantford. etc., Ry. Co. v. Parke (1885) 12 U. C. R. 607. 285, 290 Bugg, Isaac, Ex p. (1865) 2 Dr. & Sm. 452 167 Building Societies' Trust, Re (1890) 44 Ch. D. 140 721 Bullion Mining Co., The v. Cartwright (1905) 10 O. L. R. 438. . . 251 Buluwayo Market Co., Re (1907) 2 Ch. 458 448 Bunn's Case (1860) 2 D. F. & J. 275 167, 280, 788, 789 Burden v. Stanford (1915) 21 D. L. R. 209; 48 N. S. R. 532 235 Bureau v. Laurencelle (1913) 11 D. L. R. 283 337 Burkinshaw v. Nicholls (1878) 3 App. Cas. 1004 ...149, 329, 795. 798 Burland v. Earle (1902) A. C. 83 367, 435, 467, 479, 480, 484, 500, 503, 522 Burn V. London & South Wales Coal Co. (1890-91) 7 T. L. R. 118 534 Burnes v. Pennell (1849) 2 H. L. C. 497 421 Burns v. Siemens Bros, Lim. (No. 2) (1919) 88 L. J. Ch. 21 528 Burton v. Bevan (1908) 2 Ch. 240 186, 643 Bury V. Faraatima Development Cor., Ltd. (1910) A. C. 439 417 Bush's Case (1874) L. R. 9 Ch. 554 794, 796 Butler V. Manchester Ry. Co. (1888) 21 Q. B. D. 207 149 Butler V. Northern Territories Mines of Australia (1907) 96 L. T. 41 101 Calrney v. Bufk (1906) 2 K. B. 746 393 Calisher's Case (1867-8) 5 Eq. 214 819 Calumet Metals, Ltd. v. Eldredge (1914) 15 D. L. R. 461 855 Calumet Metals v. Eldredge (1914) 17 D. L. R. 276 688, 689 Calloway v. Stobart (1905) 35 S. C. R. 301 143 Calvin v. The Provincial Insurance Co. (1869) 20 U. C. C. P. 267. 106 Cammell, Ex p. (1894) 2 Ch. 392 787 Campbell's Case (1874) L. R. 9 Ch. 1; 43 L. J. Ch. 1 789 Campbell's Case (1876) 4 Ch. D. 470 475 Campbell v. Australian Mutual (1908) 24 T. L. R. 623 529 Campbell v. Barrie (1871) 31 U. C. R. 279 837, 843 Campbell v. Beyer (1906) Que. 30 S. C. 86 343 Campbell v. Community, etc., Co. (1910) 20 O. L. R. 467 125, 126 Campbell v. Compagnie Gengrale de Bellegarde (1876) 2 Ch. D. 181 746, 761 Campbell v. Maund (1835) 5 A. & E. 865 530 Campbfl! v. Taxlcabs (1913) 27 O. L. R. 141; (1912) 7 D. L. R. ft] 441, 483, 602 Cambrian Peat & Fuel Co.. Re (1875) 34 W. R. 405 475 Canada Atlantic v. Moxley. 15 S. C. R. 1 15 9 Canada Bonded Attorney and Legal Directory v. Leonard Par- miter. Ltd. (1918) 42 O. L. R. 141; 42 D. L. R. 342 503 Canada Bonded Attorney etc.. Ltd. v. G. F. Leonard (1918) 42 D. L. R. 342 ; 42 0. L. R. 141 504 Canada Cabinet Co. Re (1907) 9 0. W. R. 818 876 XX TABLE OF CASES. Can Can PAGE t'aiuuiii Coal Co., Ke, Watson's Case, 17lh D<>c., 1895, unreported decision, M.O. COut.) 820 Canada Life, etc., Co., Tlie, Close's Case (1885) 8 0. R. 92 315 Canada Food Co. v. Stanford (1916) 28 D. L. R. G89 202 Canada Furniture Co. v. Banning (J918) 39 D. L. R. 313 236. 516, 824 Canada Investment v. Scotstown (1915) 48 Que. S. C. 97 387 Canada Life Ins. Co. v. Peel Mfg. Co. (1874) 26 Gr. 487 218 Canada National Fire, etc., Co. v. Hutchings (1918) 87 L. J. P. C. 106 113, 326, 529 (.anada Paint v. William Johnson (1893) Q. R. 4 S. C. 253 61 Canada Permanent v. British Columbia Permanent (1899) 6 B. C. R. 377 61 Canada Provident and Investment Cor. (1913) 14 D. L. R. 782.. 715 Canada Woollen Mills, Re (Long's Appeal) (1905) 9 0. L. R. 367 769, 774 Canada Woollen Mills, In re (Long's Appeal) (1904) 8 0. L. R. 681 774 Canadian Bank of Commerce v. Smith (1911) 17 W. L. R. 135.. 144, 837, 843 Canadian Brass, etc., Co. v. Duclos (1917-8) Que. 18 P. R. 206 .. 825 Canadian Camera Co.. Re (1901) 2 0. L. R. 677 396, 732, 761 Canadian Diamond Co.. Re (Broad's Case) (1912-13) 6 A. L. R. 42 636 Canadian Diamond Co., Re (1913) 11 D. L. R. 252 862, 869 Canadian Direct Meat Co. [1892 1 W. N. 146 790 Canadian Druggists v. Thompson (1910) 2 O. W. N. 1213; (1911) 24 0. L. R. 401 224, 785 Canadian General iSecurities v. George (1918) 42 0. L. R. 560.. 139, 141, 143 Canadian General Service Corporation, Re (1914) 16 D. L. R. 15 682 Canadian General Service Corporation, Re (No. 2) (1914) 16 D. L. R. 17; 24 Man. L. R. 143 704 Canadian Home Investment Co., Re (1917) 37 D. L. R. 598 818 Canadian McVickar Engine Co., Re (1909) 13 0. W. R. 916 248 Canadian Mail Orders, Limited, Re (1910) 2 O. W. N. 882 239 Canadian Mineral Rubber Co., Re (1916) 10 O. W. N. 456; (1916-7) n O. W. N. 135 814 Canadian National Investors v. Canadian National Estates (1911-12) 1 W. W. R. 87 60 Canadian Ohio Motor Co. v. Cochrane (1914-5) 7 0. W. N. 698; (1915) 8 0. W. N. 242 245. 249, 283, 487 Canadian Pacific Ry. v. Ottawa Fire (1908) 39 S. C. R. 405 ..15, 24 Canadian Pacific Ry. Co. v. Western Union Telegraph Co. (1889) 17 S. C. R. 151 123, 133 Canadian Relief Society, Re, J. J. Patterson's Case (unreported decision of M. O.) 791 Canadian Shipbuilding Co., Re (1912) 4 O.-W. N. 157 854, 855 Canadian Shipbuilding Co., Re (1912) 26 0. L. R. 564 396, 760 Canadian Tin Plate Co., Re, Morton's Case (1906) 12 0. L. R. 594 230, 233, 240, 241, 287 Cann v. Eakins (1891) 23 N. S. R. 475 363, 481, 482 Cann v. International Trust (1894) 40 N. S. R. 65 367, 369 TABLE OF CASES. XXI Can — Cem PAGE Cannon v. Trask (1875) L. R. 20 Eq. 669 518, 523 Canwell. Ex p. (1864) 4 D. J. & S. 539 801 Capel V. Sims (1888) 58 L. T. 807 182 Capital Fire Ins. Association, In re (1883) 24 Ch. D. 408 733, 829 Capital Trust Corporation v. Yellowliead Pass Coal Co. (1916) 27 D. L. R. 25 ; 9 A. L. R. 463 410, 824, 833 Capital Trust v. Yellowhead Pass, etc., Co. (1916) 33 W. L. R. 873 826 Caratel (New) Mines, Ltd. (1902) 2 Ch. 498 527 Card V. Carr (1856) 1 C. B. N. S. 197 490 Cardiff Coal Co., Re (1910-11) 3 A. L. R. 325 420 Cardiff Coal Co., Re (1911) 18 W. L. R. 165 487 Cardiff Coal Co. v. Norton (1866) L. R. 2 Eq. 558; 2 Ch. 405^-. . . 802 Cardiff Preserved Coal Co., The, In re (1862-3) 32 L. J. Ch. 154. . 476 Cardiff Preserved Coal and Coke Co. v. Norton (1887) L. R. 2 Ch. 410 690 Carew's Case (1854) 5 D. M. & G. 94 730 Carmichael's Case [1896] 2 Ch. 643 790 Carnelly, Ex parte (1887) 35 Ch. D. 656 745 Carpenter. Ltd.. Re, Hamilton's Case (1915-16) 35 0. L. R. 626; (1916) 29 D. L. R. 683 233, 433, 451, 642, 643, 645 Carling's Case (1875) 1 Ch. D. 124 794 Carriage Co-operative Supply Association, Re (1883) 23 Ch. D. 154 748 Carrick v. Canada Pipe, etc., Co. (1893) Q. R. 3 S. C. 383 560 Carroll v. Penberthy Injector Co. (1889) 16 A. R. 446 149 Carson & Co., H J. v. Montreal Trust Company (1915) 49 N. S. R. 50 736, 738, 875, 877 Carstin, Ex p .(1862) 10 W. R. 457 773 Carter's Case (1886) 31 Ch. D. 496 870 Carter v. Columbia Bitulithic Co. (1914) 18 D. L. R. 520 104 Carter v. C. N. R. (1911) 32 O. L. R. 140 248 Carter and Kenderdine's Contract, In re (1897) 1 Ch. 776 839 Cartmell's Case (1874) L. R. 9 Ch. 691 788 Castell & Brown, Ltd., Re (1898) 1 Ch. 315 393, 395 Castleman v. Waghorn (1907-8) 7 W. L. R. 412 336 Caston's Case (1884) 10 P. R. 339 789 Caston's Case (1885) 7 O. R. 448; (1885) 12 A. R. 486; (1886) 12 S. C. R. 644 227, 246, 247. 249, 789 Catholic Publishing Co., Re (1864) 2 D. J. & S. 116 ....685, 690, 711 Catholic Register, Re, Ex p. Foy & Coffee, M. O. (Ont.), 10 Feb., 1900 (unreported) 813 Cavendish Bentick v. Fenn (1887) 12 App. Cas. 652 866, 870 Cawley & Co.. Re (1889) 42 Ch. n. 209 283, 472 Cayley v. Cobourg, etc., R. Co.. 14 Gr. 571 593 Cazelais v. Picotte (1900) Q. R. 18 S. C. 538 284 C. B. C. V. Bellamy (1916) 25 D. L. R. 133 142 C. B. C. Corset Co., Re (1908) 12 0. W. R. 185 155 Central Bank of Canada, Re (1897) 17 P. R. 370 853, 854, 855 Central Bank, Re (1888) 30 C. L. T. 271 683 Central Bank, Re, 21 O. R. 515 842 Central Bank, Re (1888) 15 O. R. 309 ....698, 752, 753. 775, 807. 883 Central Bank. Re (1890) 26 C. L. J. 24 775 Central Bank. Barnes' Case (1889) 16 A. R. 237 559. 789, 800 XX 11 TABLE OF CASES. Cen- Cit PAGE Central Bank, Re. Cayley's Case (1889) 17 0. R. 122 847 Central Ikuik v. Eaiie (1889) 28 N. B. R. 173 861 Central Bank. Re. Henderson's Case (1889) 17 0. R. 110 784, 800 Central Bank and Hojig. Re (1890) 19 O. R. 7 251, 782 Central Bank, Re, Home Savings and Loan Co.'s Case (1891) 18 A. R. 489 170, 332 Central Bank. Lye's Claim (1892) 22 O. R. 247 775, 777 Central Bank, Re. N. A. Life Ins. Co.'s Case (1890) 30 C. L. T. 275 170. 791 Central Bank. In re, York's Case (1888) 15 O. R. 625 5, 683, 780, 784, 819. 848 Central Canada Ry. v. Murray (1882) 8 S. C. R. 314 141 Central Darjeeling Tea Co. (1866) W. N. 361 773 Central de Kaap Gold Mines, In re (1899) 69 L. J. Ch. 18; W. N. 216 502 Central Venezuela Railway Co. v. Kisch (1867) 2 H. L. 99.. .191. 200 Cercle Restaurant Castiglione Co. v. Lavery (1881) 18 Ch. D. 555 709 Ceylon Land and Produce Co., Ltd., The, In re. Ex parte Ander- son (1890-1) 7 T. L. R. 092 322 Chains' Case (1870) L. R. 6 Ch. 266 787, 788 Chandler Massey, Re (1911) 24 0. L. R. 513; (1912) 24 0. L. R. 211 762 Channel Collieries Trust v. St. Margaret's, etc.. Light Ry. (1915) 84 L. J. Ch. 28 -.445, 455 Chapel House Colliery Co. (1883) 24 Ch. D. 259 ..709, 710, 711. 716 Chapleo v. Brunswick Bldg. Society (1880) 5 C. P. D. 331; 6 Q. B. D. 696 360, 374, 496 Chapman's Case [1895] 1 Ch. -771 789 Chapman & Barker's Case. Re (1867) L. R. 3 Eq. 361 167, 785 Chapman and City of London, Re (1890) 19 0. R. 33 551 Chappie's Case (1852) 5 DeG. & Sm. 400 801 Charlebois v. Delap (1895) 26 S. C. R. 221 106 Charlebois v. Great North-West R. Co. (1892) 15 P. R. 10 551 Chase v. Lord (1879) 77 N. Y. 1 6 Chase v. Sycamore, etc., R. Co., 38 Illinois 215 558 Chatham National Bank v. McKeen (1895) 24 S. C. R. 348 470, 473, 484, 758 Cherry v. Colonial Bank of Australasia (1869) L. R. 3 P. C. 24. . 360 Chic, Re (1905) 2 Ch. 345 717 Chida Mines, Ltd. (1905-6) 22 T. L. R. 27 145, 322 Chillington Iron Co. (1885) 29 Ch. D. 159 .» 530 Chisholm's Case (1885) 7 0. R. 448 226 Churcher v. Cousins (1869) 29 U. C. R. 540 837, 843 Churrher v. Johnston (1874) 34 U. C. R. 528 846 Cie de Boissons v. Procureur General (1906) Q. R. 15 K. B. 546. 547 Christin v. Union Navigation Co., Ramsay's Digest 391 (Q. B. 1882) 157 Christineville Rubber Estates, Ltd. (1911) 81 L. J. Ch. 63 193 Christopher v. Noxon (1884) 4 O. R. 672 277, 285, 299, 444, 451, 452, 473, 520, 525, 527, 551 Citizens' Insurance Company v. Parsons, 7 App. Cas. 96 15, 17, 19, 97 TABLE OF CASES. XXlll Cit— Col P^GE City Bank v. Cheney (1857) 15 U. C. Q. B. 400 148 City Storage Co., Ltd., The, Re (1916) 30 D. L. R. 574 733 City Bank v. Smytli. 20 C. P. 93 843 City and County Investment Co., Re (1877) 25 W. R. 342 756 City and County Investment Co., In re, 13 Ch. D. 475 593 City of TorontO'V. Consumers' Gas Co. (1903) 5 O. L. R. 494.434, 435 City of Toronto v. Toronto Electric Light (1905) 10 O. L. R. 621. 113 City Transfer Co., Re, Ex p. Potter (1917) 34 D. L. R. 457 733 Civil Service Club, Re, Furness, Withy & Co.'s, Ltd. Claim (1917-8) 13 0. W. N. 138 245 Civil Service Co-operative Supply Association, Re (1916) 10 0. W. N. 143 411 Clark's Case (1854) 1 K. & J. 22 730 Clark, Ex parte (1869) 7 Eq. 550 158, 280, 819 Clarke, Ex p. (186'6) 14 W. R. 856 773 Clark V. Hamilton Mechanics' Institute (1854) 12 U. C. R. 178.. 124 Clark V. Gray ( 1902 ) 1 O. W. R. 370 195 Clark V. Hart (1858) 6 H. L. C. 633 294 Clarke's Case (1878) 8 Ch. D. 635 794, 796 Clarke v. Cuckfield Union (1852) 21 L. J. Q. B. 349 125 Clarke v. Imperial Gas, etc., Co. (1833) 4 B. & Ad. 315 .' 131 Clarke v. Latham, 25 D. L. R. 751 139 Clarke v. Sarnia (1877) 47 U. C. R. 39 373 Clarke v. Union Fire Ins. Co., Gaston's Case (1884) 10 P. R.' 339 119, 247. 736 Clarke and Union Fire Ins. Co. (1885) 10 0. R. 489 754 Clarke v. Union (ia84) 4 C. L. T. 249 ■• 818 Clarkson v. A.-G. of Ontario (1888) 15 0. R. 632; (1889) 16 A. R. 202 810 Clarkson v. McLean (1917-8) 42 0. L. R. 1 168, 319, 784 Clary v. Golden Rose (1912-13) 4 0. W. N. 1491 451 Claudet v. Golden Giant Mines (1909-10) 15 B. C. R. 13 449, 489 Cleary v. Brazil Ry. (1916) 85 L. J. K. B. 32 413 Clegg V. Earby Gas Co. (1896) 1 Q. B. 592 557 Clegg V. Ellison (1898) 2 Ch. 83 59 Cleland's Case (1877) L. R. 14 Eq. 387 783, 795 Clement v. Donaldson (1853) 9 U. C. R. 299 229 Clergue v. Humphrey (1901) 31 S. C. R. 966 214 Clifton's Case (1854) 5 De G. M. & G. 743 730 Clinch v. Financial Corporation, L. R. 4 Ch. 117 593 Clinton Thresher Co., Re (1910) 15 0. W. R. 318; 1 O. W. N. 455 760,828 Clinton Thresher Co. Re (1910) 20 0. L. R. 555 109 Clinton's Claim (1908) 2 Ch. 515 213 Cloyes V. Darling (1884) 16 R. L. 649 756, 807 Clyne Tin Plate Co. (1882) 47 L. T. 439 366 Coalport China Co., Re (1895) 2 Ch. 404 " 322 Coatos" Case (1874) L. R. 17 Eq. 169 : ■ 783 Coates V. Joselln (1866) 12 Gr. 524 837 Cobb V. Becke (1845) 6 Q. B. 936 485 Cocks, Ex p. Re Poole (1882) 21 Ch. D. 397 807 Coed Madog States Co.. In re (1877) W. N. 190 734. 805 Colt V. Dowling (1898-1901) 4 Terr. L. R. 404 119. 146. 214 Cole V. British Canadian Fur Trading Co. (1918) 42 0. L. R. 587. 764 XXIV TABLE OP CASES. Col— Com PAGE Colo and the Canada Fire and Marine Insurance Co., Re Close's Case (1S85) S O. R. 92 315, 683, 789 Collie, Re, 17 Ch. D. 334 .' 808 Colmer Jas., Ltd.. Re (1897) 1 Ch. 524 253 Collen V. Wright (1857) 8 E. & B. 647 146 Collinewood Dry Dock Co., Weddell's Case (1890) 20 O. R. 107 157, 787 Colonial Assurance Co., Re (1916) 29 D. L. R. 488; 26 Man. R. 324 782, 786, 835 Colonial Assurance Co., Re, Crossley's Case (1917) 34 D. L. R. 341 Ill, 791 Colonial Assurance Co. v. Smith (1912) 4 D. L. R. 814; 22 Man. L. R. 441 298, 482, 492 Colonial Assurance Co. v. Smith (1913) 12 D. L. R. 113; 23 Man. L. R. 243 lil. 113, 157, 163, 427 Colonial Bank of Australia v. Willan (1874) L. R. 5 P. C. 417. . . 102 Colonial Bank v. Cady (1890) 15 App. Cas. 267 313, 318 Colonial Building, etc., Co. v. Attorney-General of Quebec, 9 App. Cas. 157 15, 17, 23, 97 Colonial Engineering Co. v. Dominion Light, Heat and Power Co. (1911-2) 13 Que. P. R. 436 864 Colonial Investment Co. of Winnipeg. The (1914) 14 D. L. R. 563 707 Colonial Investment Co., Re (1914) 15 D. L. R. 650 758 Colonial Investment Co. of Winnipeg, The, Re (No. 2), (1914) 15 D. L. R. 634 699, 716 Colonial Life v. Home and Colonial (1864) 33 Beav. 548 62 Colonial Trusts Corporation (1880) 15 Ch. D. 465 364 Colonist Printing and Publishing Co. v. Dunsmuir (1902) 32 S. C. R. 679; 9B. C. R. 290 261, 363, 481 Colt v. Nellerville (1725) 2 P. Wms. 304 221 Columbia Bitulithic Co. v. Vancouver Lumber Co. (1914) 20 D. L. R. 954; (1915) 21 D. L. R. 91 108 Colwell, E. C, Candy Co. (1899-02) 35 N. B. R. 613 736, 745, 749, 827, 830 Combined Weighing Machine Co.. Re (1889) 43 Ch. D. 99 715 Comic Opera v. Desaulniers (1902-6) 7 Que. P. R. 83 766 Comet Motors v. Dominion Mutual (1910) 11 Que. P. R. 314 766 Commercial Bank, Re (1893) 9 M. R. 342 807 Commercial Bank of Canada v. Great Western Railway Co. (1865) 3 Moore P. C. (N. S.) 313 370 Commercial Bank of S. Australia, Re (1886) 33 Ch. D. 174; (1887) 36 Ch. D. 522 695, 719 Commercial Bank Corporation of India (1869) L. R. 8 Eq. 241. . 771 Commercial Bank Corporation of India and the East, Re, Smith Fleming & Co.'s Case, Gledstone & Co.'s Case (1866) L. R. 1 Ch. 538 764 Commercial Bank of India, Re (1868) L. R. 6 Eq. 517 695 Commercial Bank of London, Re (1888) W. N. 214 720 Commercial Bank of Manitoba, Re (1893) 13 C. L. T. 381 722 Commercial Bank of Manitoba, Re (1893) 9 Man. R. 342 752, 753, 775, 884 Commercial Bank of Manitoba, Re (1896) 10 Manitoba L. R. 61. 808, 809 TABLE OF CASES. XXV Com— Coo P^GE Commercial Discount Co., The, Re (1863) 32 Beav. 198 721 Commercial Rubber v. St. Jerome (1808) Q. R. 17 K. B. 275. .368, 483 Commissioners of Taxation for N. S. W. v. Palmer (1907) A. C. 179 809, 810 Common v. Matthews (1899) Que 8 Q. B. 138 , 240 Common v. McArthur (1898) 29 S. C. R. 239 295, 305, 786 Common v. McCaskill (1897) Q. R. 13 S. C. 282 766 Common Petroleum Engine Co., In re [1895] 2 Ch. 759 794 Commonwealth v. Boston R. Co., 142 Mass. 146 296 Communaute v. Kent (1904) Q. R. 13 S. C. R. 483 848 Community of Sisters of Charity v. Bastien (1902) Q. R. 11 K. B. 64 '765 Compagnie du Cap Gibralter, La v. Lalonde (1889) M. L. R. 5 S. C. 127 , 69. 286 Compagnie d'Instruments Agricoles, La v. Hebert (1875) 2 Q. L. R. 182 286 Compagnie de Mayville, La v. Whitley (1896) 1 Ch. 788 488 Companies Case, The (1916) 85 L. J. P. C. 124; (1916) 1 A. C. 588; (1916) 26 D. L. R. 288 26, 56 Company for General Promotion of Land Credit. Re (1870) L. R. 5 Ch. 380 684, 685 Conant v. Miall (1870) 17 Gr. 574 435 Connecticut, etc., Ry. v. Barley, 24 Vt. 465 69 Connolly v. Montreal, etc., Ry. Co. (1901) Q. R. 20 S. C. 1 403 Connolly Bros., In re, Wood v. The Company (1912) 2 Ch. 25.. 392 Connor-Ruddy Co. v. Robinson Whyte Co. (1909) 19 0. L. R. 133. 228 Consolidated Bank, Re (1886) 14 L. T. 656 710. 713 Consolidated Gold Fields of South Africa v. Summer & Jack East, Lim. (1913) 82 L. J. Ch. 214 405 Consolidated Investments, Ltd, Re, Simons' Case (1918) 2 W. W. R. 581 166. 819 Consolidation Nickel Mines. In re (1914) 1 Ch. 883 444. 502 Consort Deep Level, Re [18971 1 Ch. 575 790 Const V. Harris, Turn & R. 496 523 Constantinople and Alexandria Hotel Co., The. In re (1865) 13 W. R. 851 "721 Consumers' Cordage Co. v. Molson (1912) 2 D. L. R. 451 ... .199, 226 Continental Bank, Rf (1867) 15 W. R. 548 730 Continental Oxygen Co., In re (1897) 1 Ch. 511 408 Contract Corporation, Re (1866) L. R. 2 Ch. 95 803, 804 Contract Corporation. Ex parte (1867) L. R. 3 Ch. 105 218 Contract Corporation, Re (1869) L. R. 8 Eq. 14 132 Contract Corporation, In re, Gooch's Case (1871) L. R. 7 Ch. 207 '767 Contract and Agency Corporation, In re (1887) 57 L. J. Ch. 5.. 725 Cook V. Deoks (1916) A. C. 554; 85 L. J. P. C. 161 471, 473 Cook V. Hinds (1918) 42 O. L. R. 273 500, 501, 503, 504 Cook V. Royal Canadian Bank (1873) 21 Gr. 1 324 Cooke V. Marshall, 191 Pa. St. 315 6 Coolgardle Consolidated Gold Mines, Ltd., In re (1911) 13 T. L. R. 301 700. 701 Cooper V. Grlffln (1892) 1 Q. B. 740 446 Coote V. Jecks (1872) L. R. 13 Eq. 597 305 XXVI TABLE OF CASES. Cop— Cri I'-'^iii' Copall Varnish Co.. In re (1917) 2 Ch. 349; (1918) 87 L. J. Ch. 132 154 Cope V. Thames Haven, etc., Co. (1849) 3 Exch. 841 121 Cope Fruit Co.. Ltd.. and Bank of Montreal, Re (1917) 32 D. L. R. 346 758 Copp's Case (1885) 10 0. R. 497 , 304, 790 Copper Mines v. Fox (1851) 16 Q. B. 229 93 Cordova Union Gold Co., In r« (1891) 2 Ch. 580 734, 804 Cork. etc.. Railway Co.. Re (1869) L. R. 4 Ch. 748 360 Cornell v. Hay (1873) L. R. 8 C. P. 328 182 Cornwall Furniture Co., Re (1909) 18 O. L. R. 101 ....781, 782, 859 Cornwall Furniture Co., Re (1910) 20 O. L. R. 520 157, 164 Corporation of the City of Toronto v. Bell Telephone (1905) A. C. 52 24 Corporation of North Gwillimbury, The v. Moore (1865) 15 U. C. C. P. 445 10'^ Corporation of Waterford v. Price (1847) 9 Irish L. R. 310 559 Corry v. Londonderry, etc., Co. (1886) 29 Beav. 263 418 Corsellis, Re (1887) 34 Ch. D. 681 474 Cortis V. Kent Water Works (1827) 7 B. & C. 314 490 Cosmopolitan, Re (1893) 15 P. R. 185 764 Costa Rica Ry. v. Forwood (1900) 1 Ch. 756; (1901) 1 Ch. 746. 477, 478 Cot6 V. Stadacona Ins. Co. (1881) 6 S. C. R. 193 226, 227, 788 Cotman v. Brougham (1918) A. C. 514; (1918) 87 L. J. Ch. 379. 101, 700, 791 Cotton V. Imperial (1892) 3 Ch. 454 37 Cotton Plantation Co. of Natal (1868) W. N. 79 861 County of Gloucester Bank v. Rudry (1895) 1 Ch. 629 368, 460 County Life Assurance Co., In re, 5 Ch. App. 288. . .138, 139, 460. 490 Courchene v. Viger Park Co. (1915) 23 D. L. R. 693; 24 Que. K. B. 97 269, 490, 518, 519 Coveney v. Glendlnnlng (1915) 33 O. L. R. 571; 22 D. L. R. 461.. 510 Coventry and Dixon's Case (1880) 14 Ch. D. 660... 495, 866, 869, 870 Cox's Case, 3 De G. & Sm. 180 802 Coxon v. Gorst (1891) 2 Ch. 73 697 Cox Moore v. Peruvian Corporation. Ltd. (1908) 1 Ch. 604.. 392, 417 Cradock v. Piper (1850) 1 Macn. & G. 664 474 Craig's Claim (1895) 1 Ch. 267 ' ^12 Grain v. Wade (1917) 37 D. L. R. 412; 55 S. C. R. 208; (1916) 27 D. L. R. 179; (1915-6) 35 0. L. R. 402 767, 816, 817 Cramp Steel Co., Ltd.. Re (1908) 16 0. L. R. 230 694, 699. 700 Crane v. Lavoie (1912) 4 D. L. R. 175 148 Crawford v. Bathurst Land, etc.. Co. (1916) 37 O. L. R. 611; •(1918) 42 0. L. R. 256, reversed sub nom. FuUerton v. Craw- ford (1920) 60 D. L. R. 457 209, 212 429, 430, 431, 469, 472. 495, 500. 501, 504. 597, 634 Crawford v. Provincial Insurance Co. (1859) 8 C. P. 263 .. 312, 335 Crawley's Case (1869) 4 Ch. App. 322 241, 787, T89. 790 Credit Assurance, etc., Ltd., In re (1902) 2 Ch. 601 271 Cree v. Somervail (1879) 4 App. Cas. 648 306 Crew V. Dallas (1908-9) 9 W. L. R. 598 508 Crickmer's Case (1875) L. R. 10 Ch. 614 793, 794 Crigglestone Coal Co., Re (1906) 2 Ch. 327 717, 719 TABLE OF CASES. XXVll Cro — Dav page Crockett v. Academy of Music (1902) 22 Occ. Notes 201 258 Croft V. Day (1845) 7 Beav. 84 62 Crombie v. Jackson, 34 U. C. Q. B. 575 875 Crompton & Co., In re (1914) 1 Ch. 954 40G Crook V. Corporation of Seaford (1871) L. R. 6 Ch. 551 150 Crookhaven Mining Co., Re (1886) L. R. 3 Eq. 73 697 Crouch V. Credit Foncier (1873) L. R. 8 Q. B. 374 382 Crown Bank, In re (1890) 44 Ch. D. 634 701, 723. 728 Crown Mutual Hail Insurance Co. (1908) 18 Man. L. R. 51 213 Crow's Nest Pass Hardware Co., Re (1914) 16 D. L. R. 44 420 Culleme v. London, etc., Permanent Building Society (1890) 25 Q. B. D. 485 869 Cunard Steamship Co. v. Hopwood (1908) 2 Ch. 152 398 Cunliffe Brooks & Co. v. Blackburn Building Society (1885) 9 App. Cas. 865 358 Cunningham v. Beaudet (1878) 11 Q. L. R. 168 335 Currie's Case (1862) 3 De G. J. & S. 367 797 Currie v. Harris Lithographing Co. (1918) 41 D. L. R. 227; 41 0. L. R. 475 98 Curtis' Case (1868) L. R. 6 Eq. 455 . 782 Cushing V. Cushing (1906) 37 S. C. R. 427 851,854,856 Gushing Sulphite Fibre Co., Re (1904-6) 37 N. B. R. 254. 685, 691, 714, 717 Cushing Sulphite Fibre Co., Re (1906-8) 38 N. B. R. 581. 742, 743, 744, 854 D. D. & S. Drug Co., Re, Donald's Claim (1916) 10 W. W. R. 612 (Alta.) 478, 490. 491 D. & S. Drug Co., Re (1917) 31 D. L. R. 643 830 Dale V. Hayes (1871) 40 L. J. Ch. 244 433 Dale and Plant, Ltd., Re (1889) 61 L. T. 206 120 Dallaire v. Leclerc (1918) 53 Que. S. C. 201 507, 512 Dalton V. Dalton [18921 66 L. T. 704 780. 794 Dalton V. Dominion Trust Co. (1918) 3 W. W. R. 42 (B. C.) 398 Daniel v. Goldhill (1899) 6 B. C. R. 495 470 Daniels v. Noxon (1889) 17 A. R. 206 343 D'Arcy v. Tamar Ry. Co. (1867) L .R. 2 Ex. 158; 14 W. R. 96.132, 490 Darlington Forge Co.. Re (1887) 34 Ch. D. 522 795 Darrah v. Wright (1914-5) 7 0. W. N. 233 507, 509, 511 Dartmouth College v. Woodward (1819) 4 Wheat. 518 6 Davey & Co. v. Williamson (1898) 2 Q. B. 194 393 David V. Dow ( 1916 ) 27 D. L. R. 689 337 David Lloyd & Co., Re (1877) 6 Ch. D. 339 410, 411, 743 David.son v. Grange (1854) 4 Gr. 377 226, 227, 458, 459 Davidson v. Great West Saddlery Co. (1917) 35 D. L. II. 526; ( 1919 ) 59 S. C. R. 45 98 Davidson v. Mclnnes, 24 Gr. 414 837 Davidson v. Ross (1876) 24 Gr. 22 840, 841, 842 Davies & Co., Chas. 11., Re (1907) 9 0. W. R. 993 719 Davies, Charles H., Ltd., In re, McNlcol's Case (1909) 18 0. L. R. 240 171 Davies v. Bolton (1894) 3 Ch. 678 131 XXVI 11 TABLE OP CASES. Dav — Doi PAGE navies v. Gas, Light and Coke Co. (1909) 1 Ch. 708 534 Davies v. Gillard, 21 O. R. 431 842 Davis's Case (1871 ) 12 Eq 561 361, 380 Davis V. Grand River Navigation Co. (1840) 6 U. C. R. 59 124 Davis v. Muir (1869) 13 L. C. J. 184 839 Davis V. United States Electric Power Co., 77 Md. 35 475 Davison v. Duncan (1857) 7 E. & B. 229 520 Dawson v. Moffatt (1886) 11 0. R. 484 746 De Beers Consolidated Mines. Ltd. v. British South Africa Co. (1912) A. C. 52 400 De Beers Consolidated v. Howe (1906) A. C. 455 114, 115 De Gi'aves v. Monmouth Corporation (1830) 4 C. & P. Ill 125 Delorimer v. Canadian Gas & Oil (1908) Q. R. 34 S. C. 381 682 Delmar, Ex p., 38 W. R. 752 810 Dempsey v. Toronto (1849) 6 N. C. Q. B. 1 124 Denault v. Stewart (1918) 54 Que. S. C. 209 420, 491 Dcnham, Re (1883) 25 Ch. D. 752 197, 431, 493 Denison v. Lesslie (1878-9) 3 A. R. 536 159, 240, 438 Denison v. Smith (1878) 43 U. C. Q. B. 503 321 Denman v. Clover Bar (1913) 48 S. C. R. 318; 15 D. L. R. 241. 469, 473, 478 Denoon. In re (1899) Q. R. 15 S. C. 567 552 Dent's Case (1873) L. R. 8 Ch. 768 789 Dent V. London Tramways (1880) 16 Ch. D. 344 257 Denton Colliery Co., Re (1874) 18 Eq. 16 795 Delta Syndicate, In rfe (1885) 30 Ch. D. 153 794 Dermatine v. Ashworth (1905) 21 T. L. R. 510 151 . Derry v. Peek (1889) 14 App. Cas. 337 188, 195 De Ruvigne's Case (1877) 5 Ch. D. 306 798 Development Company of Central and West Africa, In re (1902) 1 Ch. 547 272 Deverges v. Sandeman (1902) 1 Ch. 579 343 Devonshire Silkstone Coal Co.. In re (1878) W. N. 71 759 De Waal v. Adler (1887) 12 App. Cas. 141 336 Dewey & O'Heir Co., Re (1909) 13 0. W. R. 32 701 Deyes v. Wood (1911) 1 K. B. 806 414 Diamond v. St. George Lime Co., 4 N. B. 537 124 Dickson v. Murray (1881) 28 Gr. 533 457, 530 Dickson Co. of Peterborough v. Graham (1913) 9 D. L. R. 813. 142. 143 Dlebel v. Stratford Improvement Co. (1916) 37 O. L. R. 492; (1916-17) 38 0. L. R. 407 91, 670 Diehl v. Carritt, In (1907) 15 0. L. R. 202 416, 417 Dignard. Re (1910) 11 Q. P. R. 389 753 Dimes v. Grand Junction Canal Co. (1852) 3 H. L. C. 791 450 Dimock v. N. B. Marine Insurance Co. (1849) 6 N. B. 398 125 Discoverer's Finance Corporation, Lindlar's Case (1910) 1 Ch. 316 (C. A.) 328, 329 Disderl & Co., In re (1870) 40 L. J. Ch. 248 797 Dixon's Case (1869) L. R. 5 Ch. 79 300 Dobie V. Temporalities Board (1882) 7 App. Cas. 136 21 Doctor V. Peoples' Trust Co. (1914) 16 D. L. R. 192 141, 143 Doe d. Pennington v. Taniere (1848) 12 Q. B. 998 125 Doig V. Mathews (1915) 25 D. L. R. 732 453, 531 TABLE OF CASES. XXIX Doi— Duq P^GE Doig V. Port Edward Townslte Co. (1916) 22 B. C. R. 418 531 Dominion Bank v. Cowan (1887) 14 0. R. 465 687, 837 Dominion of Canada Plumbago Co., Re (1884) 27 Ch. D. 33 723, 771, 776, 834 Dominion Cold Storage Co. (1897) 17 P. R. 468 767 Dominion Cold Storage Co., Re (1898) 18 P. R. 68 871, 872 Dominion Cotton Mills v. Amyot (1912) 4 D. L. R. 306 106 Dominion Cotton Mills v. Amyot (1912) A. C. 546 367 Dominion Lin«n Mills v. Langley (1911) 19 0. W. R. 648; (affirmed) (1912) 46 S. C. R. 633 769 Dominion Marble Co., in Liquidation, Re, (1917) 35 D. L. R. 63. 99, 359 Dominion Milling Co., Re (1912) 3 D. L. R. 897; 3 0. W. N. 1618. 738 Dominion Milling Co., Re, Dennis's Case (1915) 8 O. W. N. 496. 224, 228, 230, 238, 785 Dominion Oil Co., Re (1903) 2 O. W. R. 826 32o Dominion Salvage, etc., Co. v. A.-G. (1892) 21 S. C. R. 72. 13, 71, 86, 546 Dominion Trust Co. and Allen, Re (1917) 37 D. L. R. 251 ...56, 231 Dominion Trust Co. and Boyce and McPherson, Re (1918) 43 D. L. R. 538 700 Dominion Trust Co., Re, Critchley's Case (1916) 27 D. L. R. 580. 821 Dominion Trust Co., Re, Directors' Case (1917) 32 D. L. R. 63. 494, 495, 866, 867, 868, 869 Dominion Trust Co. and Harper, Re (1915) 24 D. L. R. 670 . .732. 758 Doncaster Permanent Building Soc, Re (1867) 4 Eq. 579 805 Dorchester v. King (1915) 24 D. L. R. 373; 48 Que. S. C. 471. 380, 385, 386 Dovey v. Cory (1901) A. C. 477 424, 430, 493, 543 Downes v. Ship (1868) L. R. 3 H. L. 343 197 Doyle V. Atlas Canning Co. (1895-7) 5 B. C. R. 279 703 Driffield, In re [1898] 1 Ch. 451 805 Driver v. Broad (1893) 1 Q. B. 539 386 Dronfield Silkstone Co., Re (1883) 23 Ch. D. 511 776 Drummond's Case, Re China Steamship Co. (1869) L. R. 4 Ch. 772 .. . 796 Drury Nickel Co., Re (1895) 16 P. R. 525 771 Duck V. Tower Galvanizing Co. (1901) 2 K. B. 314 ..368. 380 Duckworth. In re (1867) L. R. 2 Ch. App. 578 760 Duclos V. Bilodeau (1914) 47 Que. S. C. 205 229 Duff V. Canada Mutual Fire Ins. Co. (1882) 9 P. R. 292; 2 0. R. 560 133 Duggan V. London, etc., Co., 19 O. R. 272; 18 A. R. 305; 20 S. C. R. 481 8 Dufresne v. Guevremont -<1896) 26 S. C. R. 216 832 Duke V. Ulrey (1909) 14 0. W. R. 392 738 Dunbar Sons & Co.. Alexander. Re (1910) 9 E. L. R. 217 716 Dunderland Iron Ore Co. (1909) 1 Ch. 44G 714 Dunne v. English (1871) L. R. 18 Eq. 524 476 Dunsmuir v. Colonist (1900-3) 9 B. C. R. 290 481, 482 Dunston v. Imperial (1832) 3 B. & Ad. 125 49 Dupont V. Compagnie de Moulin (1885) 11 L. N. 225 682 Duquesne v. La Compagnie Generale des Boissons Canadiennes (1907) Q. R. 31 S. C. 409 214 XXX TABLE OF CASES. Dui--EllU I'AOK nurnford lOlk Shoos. Ltd.. Re (1916-17) 11 0. W. N. 105 854 Durocher v. Club Cliampotre (1917-8) 19 Que. P. R. 175 697 Dutton V. Marsh (1871) L. R. 6 Q. B. 361 147 Dynevor Collieries Co., Re (1878) W. N. 199 720 Dynevor. etc., Collieries Co., Re (1879) 11 Ch. D. 605 773 Dyte V. St. Pancras Guardians (1872) 27 L. T. 342 126 E. Eales V. Cumberland (1861) 6 H. & N. 481 449 Early v. Early (1880) 49 L. J. Ch. 828 (n) 169 E. Canada Pulp, etc., Co., Re (1912-3) 14 Que. P. R. 351 766 East of England Banking Co., In re (1868) L. R. 4 Ch. 14 ..734, 768 East of England Banking Co., Pearson's Case (1872) L. R. 7 Ch. 309 771 East Kent Colliery Co., Re (1914) 30 T. L. R. 659 717 East Pant Mining Co. v. Merry weather (1864) 2 H. & M. 261 528 Eastern Railway Co. v. Symonds (1850) 5 Ex. 237 419 Eastern Townships Bank v. Municipality of Compton (1871) 7 R. L. 446 382 Eastern Trust v. Cushing Sulphite (1906) 2 E. L. R. 93; 3 N. B. Eq. 392 402 Ebbw Vale Steel, Iron & Coal Co., In re (1876) 4 Ch. D. 827 424 Eberle Hotels and Restaurant Co. v. James (1887) 18 Q. B. D. 49 817 Ebsworth and Tidy's Contract, In re (1889) 42 Ch. D. 23 761 Ecclesiastical Commissioners v. Merrill (1869) L. R. 4 Ex. 162.. 133 Eclipse Gold Mining Co., Re (1874) L. R. 17 Eq. 490 805 Eddy V. Henderson, 6 M. L. R. (S. C.) 137 685 Eddystone Marine, Re (1893) 9 T. L. R. 329 798 Eddystone Marine, etc.. Co., Re (1893) 3 Ch. 9 157, 788 Eden v. Ridsdales Co. (1889) 23 Q. B. D. 368 (C. A.) 473, 476 Edge V. Security Life Ins. Co. (1912) 8 D. L. R. 492 246 Edgington v. Fitzmaurice (1885) 29 Ch. D. 459 192 Edinburgh Life Assurance Co. v. Graham (1860) 19 U. C. L. R. 581 107 Edmonds v. Foster (1875) 45 L. J. M. C. 41 556 Edmonton Brewing and Malting Co. (1918) 2 W. W. R. 350 713 Edmonton Brewing, etc., Co., Re (1919) 43 D. L. R. 749 719 Edwards v. Blackmore (1918) 42 O. L. R. 105; 42 D. L. R. 280. 91, 121, 670 Edwards v. Midland Ry. Co. (1880) 6 Q. B. D. 287 149 Edwards v. Standard Rolling Stock Syndicate (1893) 1 Ch. 574 . 417 Eldorado Union Store Co., Re (1886) 18 N. S. 6, R. & G. 514... 694, 704, 726 Electric Engineering Co., Re (1891) 64 L. T. 658 704 Elgin Loan Co. (1905) 10 0. L. R. 41 762 Elkington & Co., Re (1908) 11 Can. Ex. Ch. 293 61 Elkington's Case (1867) 2 Ch. App. 511 41, 245, 246, 789 Elkington & Co. v. Hurter (1892) 2 Ch. 452 361 Ellis V. Midland R. Co. (1882) 7 A. R. 464 130 Elliott & Sons, Ltd.. Re (191.5-16) 9 O. W. N. 51 852 Ellis V. Norwich Broom & Brush Co. (1906) 8 0. W. R. 25 479 Elmira, etc., Co., Re (1916) 10 0. W. N. 6 718 TABLE OF CASES. XXXI . Elv— Exc PAGE Elve V. Boynton (1891) 1 Ch. 501 93 Embree v. Millar (1917) 33 D. L. R. 331 87, 879 Emerson v. Flint (1858) 7 C. P. 161 154 Emerson v. Niagara Navigation Co. (1883) 2 0. R. 528 548 Emma Silver Mining Co. v. Grant (1879) 11 Cli. D. 918; (1878-9) 4 C. P. R. 396 205, 206 Emma Silver Mining Co., Re (1875) L. R. 10 Ch. 194 864 Emma Silver afining Co. v. Lewis (1878-9) 4 C. P. D. 396 205 Emmerson's Case (1866) L. R. 2 Eq. 231; 1 Ch. 433 782, 783 Empire Accident, etc.. Co., Re (1913) 10 D. L. R. 782; (1913) 11 D. L. R. 847 170 Empire Accident and Surety Co.. Faill's Case (1913) 4 0. W. N. 926, 1411 172 Empire Brewing and Malting Co., Re, Rourke & Cass' Claims (1892) 8 Man. 424 823, 828 Empress Engineering Co.. Re (1881) 16 Ch. D. 125 119, 212 Engel V. South Metropolitan Co. (1892) 1 Ch. 442 366 English Bank of the River Plate. Re (1892) 61 L. J. Ch. 205 803 English & Colonial Produce (1906) 2 Ch. 435 212 Englsh Joint Stock Bank, In re. Ex p. Harding (1867) L. R. 3 Eq. 341 733,768 English & Scottish Co. v. Brunton (1892) 2 Q. B. 700 393 Enterprise Hosiery Co. (1904) 4 O. W. R. 57 721 Equitable Loan Co.. In re (1903) 6 O. L. R. 26 728 Equitable Savings Association, Re (1903) 6 O. L. R. 26 850, 851 Era Life and Fire Insurance Co. (1863) 1 De G. J. & S. 29; 2 J. & H. 404; 1 H. & M. 672 526 Era Case, 32 L. J. Ch. 207 • • • 593 Erlanger v. New Sombrero (1878) 3 App. Cas. 1218 150, 207 Ernest v. Loma (1897) 1 Ch. 1 529 Ernest v. Nicholls (1857) 6 H. L. C. 401 36, 522 Escalera, In re (1908) 25 T. L. R. 87 407 Espuela Land and Cattle Co., In re, (1909) 2 Ch. 187 259, 835 Essey Land and Timber Co., Re, Trout's Case (1892) 21 O. R. 367 826 Estates, Limited. Re (1904) 8 O. L. R. 564 721 European Arbitration, Bentick's Case, 18 Sol. J. 234 782 European Arbitration, Thomas Brown's Case, 17 Sol. J. 289 782 European Arbitration, Ro, Minshall's Case, L. T. 29 782 European Arbitration. Re, Read's Case, Reilly 19 782 European Ass'n. Co., Re (1872) W. N. 85 730 European Banking Co., Re (1866) L. R. 2 Eq. 521 712, 722 European Central Ry. (1876) 4 Ch. D. 33 402 European Life Assurance Society, Re (1869) 39 L. .1. Ch. (N. S.) 324 686 European and North American Ry. Co. v. Mcl^eod (1875-76) 16 N. B. R. 3 237. 278 Evans's Ca.se (1867) L. R. 2 Ch. 427 224 Evans v. Davis (1893) 2 Ch. 216 221 Evans v. Ross (1879) 30 IT. C. C. P. 121 843 Ewart Carriage Works. Ltd.. In re (1904) 8 0. L. R. 527 (585, 686. 687, 689, 704 Excelsior Brick Company. In re. .lune 22. 1916 (unreported). 410, 744 XXXll TABLE OJF OASES. Exo — Fer page Exchange Bank v. Campbell (1885) 15 R. L. 373 ...756, 775, 776, 807 Exohango Bank of Canada v. Counsell (1888) 8 O. R. 673 845 Excliango Bank of Canada v. Sllnson (1885) 8 0. R. 667 845 Exchange Bank of Canada v. The Queen (1886) 11 App. Cas. 157. 809 Exchange Drapery, Re (1888) 38 Ch. D. 171 805 Exchange Trust (1903) 1 Ch. 711 301 Executors and Administrators Trust Co. v. Seaborn (1916) 27 D. L. R. 427 829, 863 Exhall Mining Co., Re (1864) 4 De G. J. & S. 377 744, 748 ExnunUh Docks, Re (1873) 17 Eq. 181 697, 712 Eyton, Ltd.. Re Adam (1887) 36 Ch. D. 299 756, 762 Factage Parisien. Re (1865) 34 L. J. Ch. 140 711 Fair and Burt, Re, 2 U. C. L. J. N. S. 216 831 Fairchild v. Ferguson (1892) 21 S. C. R. 484 106, 133, 148 Falkiner v. Grand Junction Ry. (1883) 4 O. R. 350 482 Fallowes v. Ottawa Gas Co., 19 U. C. C. P. 174 378 Family Endowment Society (1870) L. R. 5 Ch. 118 710 Farmers Bank, Re (1910-11) 2 0. W. N. 623; 22 0. L. R. 556. 4, 705, 706, 720 Farmers Bank of Canada, Re, Lindsay's Case (1916) 28 D. L. R. 328; 35 0. L. R. 470 850„860 Farmers Bank v. Sunstrum (1909) 14 0. W. R. 288 228 Farmers Loan and Savings Co., In (1904) 3 0. W. R. 837 777 Farmers Loan and Savings Co., In re (1901) 21 Occ. N. 383 143 Farmers Loan and Savings Co., Re, Debenture Holders' Case (1899) 30 O. R. 337 359, 390, 392, 394 Farmers Loan and Savings Co., Re, Ex p. Toogood (1908) 8 0. W. R. 12 865 Farmers Loan and Trust v. Nova Scotia Central (1891-2) 24 N. S. R. 542 408 Farrar v. Farrars (1888) 40, Ch. D. 395 49 Farrell v. The Caribou Gold Mining Co. (1897) 30 N. S. R. 199. 106, 363 Farrell v. Manchester (1908) 40 S. C. R. 339 ,.195, 196, 200 Farrell v. Ritchie (1877) 1 L. N. 76 324 Fashion Shop, Re (1915) 33 0. L. R. 253; 21 D. L. R. 478 ..746, 830 Faulkners, Ltd. (1915) 34 0. L. R. 536 746, 813 Faure Electric Company (1888) 40 Ch. D. 150 467, 495 Fawcett v. Lawrie (1860) 1 Dr. & Sm.l92 524 Featherstone v. Cooke (1873) L. R. 16 Eq. 298 523 Fecteu v. Ideal Confectionery, etc., Co. (1911) 12 Que. P. R. 360. 766 Federal Bank of Australia, Re (1893) 37 Sol. J. 341 695 Federal Bank of Australia (1893) 62 L. J. Ch. 564 720 Federal Mortgage Corporation and Kipp, Re (1916-7) 24 B. C. R. 12 229 Federal Mortgage Corporation and Stewart, Re, Re Winding-up Act (1917) 2 W. W. R. 282 800 Fee V. Turner (1904) 13 Que. K. B. 435 507, 508 Fenwick, Re (1915-16) 35 0. L. R. 29 347 Ferguson v. Wilson (1866) 2 Ch. 7.7 133, 466, 467 Ferrao's Case (1874) L. R. 9 Ch. 355 795 TABLE OF CASES. XXXlll Fet— Fra page Fetterley v. Russell and Cambridge (1857) 14 U. C. R. 433.... 122 Fewings. Ex parte (1884) 25 Ch. D. 338 403 Field V. Galloway (1884) 5 O. R. 502 162, 165 Fi«ldhouse v. City of Toronto (1919) 43 O. L. R. 491 96 Figgins V. Baghino (1898) 2 Ch. 72 59 Finance and Issue, Ltd. v. Canadian Produce Corporation (1905) .1 Ch. 37 643 Financial Corporation v. Lawrence (1869) L. R. 4 C. P. 731 801 Finlay v. Bristol and Exeter R. W. (1852) 7 Ex. 409 126, 127 Firbanks' Executors v. Humphreys (1886) 18 Q. B. D. 54. 103, 361, 375, 496 Fire Proof Doors. Re (1916) 2 Ch. 142; 85 L. J. Ch. 444 ?77 380, 489, 490 Fire Valley Orchards v. Sly (1913) 17 D. L. R. 3; 20 B. C. R. 23. 209 First Natchez Bank v. Coleman (1903) 2 0. W. R. 358 487 Fischer v. Burland Carriage Co. (1906) 8 0. W. R. 579 233 Fisher's Case (1885-6) 31 Ch. D. 120 247 Fisher's Case (1899) W. N. 35 793 Fisher v. Black and White Publishing Co. (1901) 1 Ch. 174... 433 Fitzherbert v. Dominion Bed Mfg. Co. (1915) 23 D. L. R. 125; 21 B. C. R. 226 192, 201, 235 Flagstaff Co., Re (1875) L. R. 20 Eq. 268 685, 711 Flatt V. Waddell, 18 0. R. 539 551 Fletcher's Case (1868) 37 L. J. Ch. 49 241 Flitcroft's Case (1882) 21 Ch. D. 519 6, 49, 431, 497, 761, 870 Florence Land, etc., Co., In re, Nicol's Case (1885) 29 Ch. D. 421. 761 Florida, In re (1896-1901) 8 B. C. R. 388 856 Florida. In re (1901-3) 9 B. C. R. 108 9, 701 Flowers, Re (189G) 75 L. T. 306 548 Foley V. Barber (1909-10) 1 0. W. N. 40 141, 143, 220 Follitt V. Eddystone, etc., Quarries (1892) 3 Ch. 75 417 Forest of Dean, etc.. Company, In re (1870) 10 Ch. D. 450 466, 467, 492, 494, 495 Forest v. Great North West R. W. Co. (1899) 12 M. R. 472. .124. 131 Forget V. Cement Products Co. (1915) 24 Que. K. B. 445; (1916) 28 D. L. R. 717 203, 226. 228, 240 Forsythe v. The Bank of Nova Scotia (1890-1) 18 S. C. R. 707, amrming (1889-90) 22 N. S. R. 97 752, 753, 754, 884 Fort George Lumber Co., The, In re (1913) 48 S. C. R. 593 829 Fort William Comercial Chambers v. Braden (1913) 6 0. W. N. 24; (1914-5) 7 O. W. N. 679 232, 285. 637, 644 Fortin v. Dorchester (1915) Que. 48 S. C. 258 718 Foss V. Harbottle (1843) 2 Hare 461 461, 522, 524 Foster v. British Colonial Fire Insurance Co. (1917) 37 D. L. R. 404 129,143 Foster v. Foster (1916) 1 Ch. 532; 85 L. J. Ch. 305 478 Foster v. New Trinidad Lake Asphalt Co. (1901) 1 Ch. 212 421 Fotherglirs Case? (1873) L. R. 8 Ch. 270 789, 794 P^unstone's Case (1875) L. R. 20 Eq. 524 794 Fox's Case. L. R. 6 Ch. 176 593 Fox V. Newfoundland Government (1898) A. C. 667 810 Fox V. Selkirk, etc., Co. (1912) 8 D. L. R. 945 300 France v. Clark (1884) 26 Ch. D. 257 317 II. C. A. (■ XXXIV TABLE OF CASES. Fra — Gen page Franco-Belgian, etc.. Co. v. I)nl)uc (1918) 41 D. L. R. 711 416 Frank v. Boston Shoe (1015) 'li Que. K. B. 267 782 Frankburg v. Great Horseless Carrriagc Company (1900) 1 Q. B. 504 C. A 195 Franklin v. Neate (1844) 13 M. & W. 481 167 Fraser v. Brescia Steam Tramways Co. (1887) 56 L. T. 771 764 Fraser v. Hickman (1863) 12 C. P. 584 547 Fraser v. Whalley (1864) 2 H. & M. 10 523 Fraser River Mining Co. v. Gallagher (1896-7) 5 B. C. R. 82 .458, 798 Free Fishermen of Faversham (1887) 36 Ch. D. 329 697, 711 Freeborn v. Singer Sewing Machine Co. (1885) 2 M. R. 253 149 Freeman v. Canadian Guardian (1908) 17 O. L. R. 296. .292, 296, 301 French v. Hamilton, etc., Copp's Case (1866) 10 0. R. 497 790 French & Co., J. A., Re (1909-10) 1 O. W. N. 864; (1910-11) 2 O. W. N. 489 655 French Gas, etc., Co. v. Desbarats (1912) 1 D. L. R. 136 . .67, 196, 512 Frend v. Dennett (1858) 4 C. B. N. S. 576 122 Freygang v. Daveluy (1892) 2 R. J. Q. (S. C.) 505 765 Frid Lewis Co. v. Homes et al. (1914-5) 8 Sask. L. R. 185 737 Frontenac, Municipal Council of v. Chestnut (1852) 9 U. C. R. 365 123 Frost & Co., In re (1899) 2 Ch. 207 793 Fuches V. Hamilton Tribune (1885) 10 0. R. 497 303, 482 Fuches V. Hamilton Tribune (1884) 10 P. R. 409 691, 739, 745, 749, 830 Fulford, Re (1913) 14 D. L. R. 844; 24 O. L. R. 375 419 Fullerton v. Crawford (1920) 50 D. L. R. 457; 59 S. C. R. 314. . . 504 And see Crawford v. Bathurst Land, etc., Co. Fuller V. Glyn Mills (1914) 2 K. B. 168 313, 342 Fyfe's Case (1869) L. R. 4 Ch. 768 782, 783 G. Gadd V. Houghton (1876) 1 Ex. D. 357 467 Gadsden v. Bennetto (1912) 3 D. L. R. 719 468 Gadsden v. Bennetto (No. 2) (1913) 9 D. L. R. 719 472 Gait V. Erie R. Co. (1868) 14 Gr. 499 370 Garden Gully, etc., Co. v. McLister (1875) 1 App. Cas. 39 284, 299 Gardner v. Canadian Manufacturing Co., Ltd. (1900) 31 0. R. 488 500, 503 Galloway v. Halle Concerts Society (1914-5) 31 T. L. R. 469 277 Gardner v. Iredale (1912) 1 Ch. 700 157, 502, 648 Garland v. Northumberland Land Co. (1900) 31 O. R. 40 105, 126 Gartside v. Silkstone (1882) 21 Ch. D. 762 381 Gas Light Co. v. Terrell, U R- 10 Eq. 168 842, 844 Gastonquay v. Savoie (1898-99) 29 S. C. R. 613 774 Gates V. Seagram (1909), 10 0. L. R. 216 816 Geddes v. Toronto St. Ry. Co. (1864) 14 C. P. 513 382, 383 Geipel v. Peach (1917) 2 Ch. 108; 86 L. J. Ch. 745 190 General Auction Estate Co. v. Smith (1891) 3 Ch. 432 359 General Company for Promotion (1870), L. R. 5 Ch. 363.314, 710, 711 General Discount Co. v. Stokes (1864) 17 C. B. N. S. 765 801 General Exchange Bank, In re (1867) L. R. 4 Eq. 138 724 General Exchange Bank, Re (1866) 14 W. R. 827 713 General Financial Bank, Re (1882) 20 Ch. D. 276 721 TABLE OF CASES. ' XXXV Gen— Gol p^ge General Provident Co., Re (1869) 38 L J. Ch. 320 360 General Provident Ins. Co., Re (1868) 17 W. R. 42 752 General Ry. Syndicate, Re (1899) 1 Ch. 770; (1900) 1 Ch. 365. . 787, 788, 790 General Reversionary Investment v. General Reversionary Co. (1898) 1 Megone 65 61 General Rolling Stock Co. (1865) 34 Beav. 314 710 General Rolling Stock Co., In re, Chapman's Case (1886) L. R. 1 Eq. 346 733 General Rolling Stock Company, In re, Joint Stock Discount Co.'s Claim (1872) L. R. 7 Ch. 646 731 General Service Co., Re (1891) 1 Ch. 496 727 George v. Strong (1909-10) 1 0. W. N. 350 509 George Newman & Co., Re (1895) 1 Ch. 674.... 49, 459, 497, 502, 515 Georgian Bay Ship Canal Co., In re (1899) 29 0. R. 358.... 716, 717i German Date Coffee Company (1882) 20 Ch. D. 169 100, 700 Gerson v. Simpson (1903) 2 K. B. 197 190 Giant Mining Co. (1901-4) 10 B. C. R. 327 744. Gibbs & West's Case (1870) L. R. 10 Eq. 312 483 Gibson y. Barton (1875) L. R. 1 Q. B. 329 556 Gibson v. Brand, 4 M. & G. 179 843 Gibson v. Muskett, 4 M. & G. 160 843 Gignac v. Gignac & Cie (1910) Que. 37 S. C. 174 434 Giguere v. Colas (1915) 48 Que. S. C. 198 251, 469, 500 Gilbert's Case (1869-70) L. R. 5 Ch. 559 -278, 471 Gilbert v. Hall (1886) M. L. R. 2 Q. B. 374 458 Gildersleeve v. Balfour (1893) 15 P. R. 293 216 Gillies Guy, Ltd., Re and Laidlaw (1917-8) 13 0. W. N. 11, 57. . 91 Gilligan v. National Bank (1901) 2 Ir. 513 401 Gilraan v. Robertson (1884) 7 Legal News, 60 S. C 300, 458 Gilman v. Royal Canadian Insurance Co. (1884) 7 L N. 352; 1 M. L. R. S C. 1 300 Girard v. Gariepy (1916) 49 Que. S. C. 284 816 Glace Bay v. Harrington (1910-1) 45 N. S. R. 268 487 Glasdir Copper Mines, In re (1900) 1 Ch. 365 414, 415 Glass V. Hope (1869) 16 Gr. 420 289, 301 Glen Brick Co., The v. Shackwell (1870) R. C. 121 245 Globe Fire Insurance Co., Re, Robertson's Case (1909) 11 W. L. R. 45, 293 ; 2 Sask. R. 266 248 Globe New Patent Co., In re (1875) L. R. 20 Eq. 337 685, 711 Glory Paper Mills Co., In re, Dunster's Case (1894) 3 Ch. 473... 447 Glossop v. Glossop (1907) 2 Ch. 370 450 Glover v. Giles, 18 Ch. D. 173 12 Glnckstein v. Barnes (1900) A. C. 240 208, 209. 211, 479 G. N. W. Telegraph Co. v. La Cie du Journal du Monde (1902-3) 5 Que. P. R. 379 747 G. N. W. C. Ry. Co. v. Charlebois (1899) A. C. 1 1 1 101 Gold Co., Re (1879) 12 Ch. D. 77 862 Gold v Maldaver (1912) 4 0. W. R. 106 46 Goldfields and Harris Maxwell, Re (1910-11) 2 O. W. N. 1373.334. 345 Gold Hill Minrs (1882), 23 Ch. D. 216 708, 712 Goldrich v. Colonial Assurance Co. (1916) 28 D. L. R. 542... 740, 741 Goldstein v. Vancouver Timber and Trading Co. (1912) 4 D. L. R. 172 766 XXXV'l TABLE OF CASES. Goo— Gre PAGE Good aud Jacob Y. Shantz, Re, 21 0. L. R. 153 113 Good and Jacob Y. Sbantz Co., Ltd. (1911) 2[l 0. L. R. 544.. 325, 482 Good V. Nepisiguit Lumber Co. (1911-13) 41 N. B. R. 57 745, 827, 828, 875 Goodfellow V. Nelson Line (1912) 2 Ch. 324 417 Goodwin v. Ottawa and Prescott Ky. Co. (1862) 22 U. C. R. 186; (1S63) 13 C. P. 254 335 Goodwin v. Robarts (1875) L. R. 10 Ex. 337 382 Goodwin v. Robarts (1876) 1 App. Cas. 478 10 Gordon v. Toronto, etc., Land Co. (1885) 2 M. R. 318 131 Gosling V. Gaskell (1897) A. C. 575 414 Gourlie v. Chandler (1906-7) 41 N. S. R. 341 217 Goulet V. Hydraulic Co. of Portneuf (1917) Que. 52 S. C. 58 489 Gott V. Gott (1862) 9 Gr. 165 382 Government Stock v. Manila Railway (1897) A. C. 81... 390, 392, 394 Gover's Case (1875) 1 Ch. U. 182 .'. .182, 207 Gowans Kent v. Assinaboia Club (1915) 25 D. L. R. 695. 125, 126, 142 Gower's Case (1868) L. R. 6 Eq. 77 783 Gowganda Queen Mine v. Boeckh (1911) 24 O. L. R. 293 and 300; affirmed (1912) 46 S. C. R. 645 .643, 645 Goy & Co., Farmer v. Goy (1900) 2 Ch. 149 384 Graham v. Casselman (1893) Q. R. 4 S. C. 91 736, 739 Graham v. Casselman (1893) 4 R. J. Q. (S. C.) 91 755 Graham Island Collieries v. Canadian Development Co. (1913) 12 D. L. R. 316 209 Graham Island Collieries v. McLeod (1914) 16 D. L. R. 281.. 235, 279 Gramm Motor, etc., Co. and Bennett, Re (1915-16) 35 O. L. R. 224 223, 224, 230, 241, 654 Grant v. United Switchback Co. (1884) 40 Ch. D. 135 476, 523 Graver Tank Works v. Morris (1916) 28 D. L. R. 696 (Man. C. A.) 236 Gray v. Lewis (1873) L. R. 8 Ch. 1050 524 Great Britain Mutual Life Assurance Society, Re (1880) 16 Ch. D. 246 708 Great Eastern R. Co. v. Turner (1872) L. R. 8 Ch. 149 218, 466 Great North of England Ry. v. Biddulph (1840) 7 M. & W. 243. . . 290 Great Northern Construction Co., Re (1916) 53 S. C. R. 128. .856, 857 Great Northern Salt, etc.. Works, In, Ex p. Kennedy (1890) 44 Ch. D. 472 881 Great North-West Ry. Co. v. Charlebois (1899) A. C. 114 550 Great Northern Assurance Co., Re, Black's Case (1915) 25 D. L. R. 703; 25 Man. R. 670 246, 247 Great Northern Salt and Chemical Works (1890) 44 Ch. D. 472. 459 Great West Brick and Coal Co., Ltd., Re (1915-6) 9 Sask. L. R. 240 686, 687, 688, 689 Great West v. Installations, Ltd. (1914) 15 D. L. R. 896 (Alta.) . 705, 750 Great Western (Forest of Dean) Coal Consumers' Co., Re (1882) 21 Ch. D. 769 709, 710, 713, 714 G. W. R. Co. V. Commers (1894) 1 Q. B. 507 593 Great Western R. W. Co. v. Preston, etc., Co. (1859) 17 U. C. R. 477 106,122 Great Western R. Co. v. Metropolitan R. Co. (1863) 32 L. J. Ch. 382 218 TABLE OF CASES. XXXVll Gre — Ham page Great Wheal Polgooth (1883) 53 L. J. Ch. 42; 49 L. T. 20 205 Greenshield's Case (1852) 2 De G. & Sm. 599 801 Greenstreet v. Paris (1874) 21 Gr. 229 468 Greenwood Leather Shod Wheel (1900) 1 Ch. 421 182 Gregory v. Patchett (1864) 33 Beav. 595 '. 424 Grice v. Bartram (1912) 3 0. W. N. 1312 343 Grier v. Plunkett (1868) 15 Gr. 152 524 Grigson v. Taplin (1916) 85 L. J. Ch. 75 393, 409 Grills V. Farah (1910) 21 O. L. R. 457 160, 165, 166, 816 Grissell's Case (1865-6) 1 Ch. 528 819 Grosvenor, etc., Hotel Co., Re (1897) 76 L. T. 337 536 Grundy v. Briggs (1910) 1 Ch. 444 346, 347 Grundy Stove Co., Re (1904) 7 0. L. R. 252 688, 706 Guelph Linseed Oil Co., Re (1903) 2 0. W. R. 1151 751 Guenard v. Coe (1914) 17 D. L. R. 47; 7 A. L. R. 245 507, 510 Guillot & Sandwich and Windsor Gravel Road Co., Re (1867) 26 U. C. R. 246 335 Guinness v. Land Corporation of Ireland, 22 Ch. D. 349 307 Gunn's Case (1867-8) 3 Ch. App. 40 239, 240, 786 H. Hadleigh Castle Gold Mines, In re (1900) 2 Ch. 419 527 Hagell V. Currie (1867) W. N. 75 743 Haggart, Peaker & Runion's Case, In re (1891-2) 19 A. R. 582. 224, 279, 445, 785, 787 Haggin v. Comptoir D'Escompte, 23 Q. B. D. 521 114 Haigh V. North Brierley Union (1858) E. B. & E. 783 125 Halifax, etc., Co. v. McIVIanus (1894) 27 N. S. R. 173 225 Halifax Carette Co. v. Moir (1895) 28 N. S. R. 45 225, 229 Halifax Power Co., Re (1917) 36 D. L. R. 393 705 Halifax Sugar Co. (1891) W. N. 29 790 Halifax Sugar Refinery Company, Re (1889) 22 N. S. 71 696 Hall & Co., In re (1888) 37 Ch. D. 712 ' 798 Hall. A. W. & Co., Re (1885) W. N. 190 725 Hall Mfg. Co., Joseph, Re (1884) 10 P. R. 485 703. 720, 721, 770 Hall, W. J., & Co. (1909) 1 Ch. 521 259 Hallmarks Case (1878) 9 Ch. 329 559 Hanibro v. Burnand (1904) 2 K. B. 10 145 Hamilton v. Dennis (1866) 12 Gr. 325 229 Hamilton v. Grant (1900) 30 S. C. R. 566 160, 312 Hamilton v. Holmes (1900-1) 33 N. S. R. 100 n ^49 Hamilton v. Niagara Harbour and Dock Co. (1842) 6 U. C. R. (O. S.) 381 127 Hamilton v. Stewiacke (1897) 30 N. S. R. 166 246 Hamilton & Co. v. Townsend (1886) 13 A. R. 534 216 Hamilton, etc., Ry. v. Gore Bank (1873) 20 Gr. 190.123, 141, 146, 485 Hamilton and Flamborough Koad Co. v. Townsend (1887) 13 A. R. 534 12, 33, 545 Hamilton Ideal Manufacturing Co., Re (1915) 34 O. L. R. 66. .699. 700 Hamilton. Wm.. Mfg. Co. v. Hamilton Steel, etc.. Co. (1911) 23 O. L. R. 270 731. 732, 766 Hamilton, William. Mfg. Co., Re (1909-10) 1 0. W. N. 61. 421 761 Hamilton's Windsor Iron Works. Re (1879) 12 Ch. D. 712 393 XXWlll TABLE OF CASES. Ham— Hea PAGE Haminond v. Bank of Ottawa (1910) 22 0. L. R. 73 368, 837 Hanipsliiie Land Co., Re (1896) 2 Ch. 743 381 Hand Fireworks Co.. T. W. v. Baikie (1913) 43 Que. S. C. 325 .. 216 Hansard Publishing Union, Re (1892) 8 T. L. R. 280 381 Hanson v. Montreal Park and Island Ry. (1902-3) 5 Que. P. R. 355 401 Harben v. Phillips (1883) 23 Ch. D. 14 487, 528 Hardoon v. Belilios (1901) A. C. 118 167, 280 Hardy v. Fothergill, 13 App. Cases 351 810, 811, 812 Hardy v. Pickerel River (1898) 29 S. C. R. 211 13, 73 Hare's Case (1869) L. R. 4 Ch. 503 788 Harmer v. Macdonald Co., Ltd. (1917) 33 D. L. R. 363; (1919) 59 S. C. R. 45 98 Harper v. Hamilton Retail Grocers' Association (1900) 32 0. R. 295 520 Harris, Re (1905) 5 0. W. R. 649 781, 860 Harris* Case (1872) L. R. 7 Ch. App. 587 241, 242, 788 Harris v. Bank of Australasia, 15 Moo. P. P. 116 841 Harris v. English Canadian Co. (1905) 3 W. L. R. 5 487, 488, 489 Harris v. Sumner (1908) 5 E. L. R. 161 109, 235 Harris v. The Dry Dock Co. (1859) 7 Gr. 450 298 Harris Calculating Machine Co. (1914) 1 Ch. 920 .374, 407 Harris-Maxwell Larder Lake, etc., Co. (1909-10) 1 0. W. N. 984 701 Harrison's Case (1868) 3 Ch. App. 633 249 Harrison v. Marshall (Meredith, C.J.C.F., March 4th, 1920, un- reported) 624 Harrison v. Mexican Rail Co. (1875) L. R. 19 Eq. 358 253 Harrison v. Nepisiguit Lumber Co. (1912) 11 E. L. R. 314.. 399, 761 Harrold v. Plenty (1901) 2 Ch. 314 341 Hart's Case (1868) L. R. 6 Eq. 512 783 Hart V. Frontlno (1870) L. R. 5 Ex. Ill 798 Hart and Ontario Express and Transportation Co., In re (1893) 22 0. R. 510 809 Hart V. Ontario Express and Transportation Co.; Kirk and Marling's Case (1893) 24 0. R. 340 8, 306 Hart V. Ontario Express Co., Molsons Bank Claim (1894) 25 0. R. 247 843, 860. 876 Hartley's Case (1874) L. R. 10 Ch. 157 794, 795 Hartwick Fur Co., Ltd., Re, Murphy's Claim (1914) 17 D. L. R. 853 815 Harvey v. Mitchell (1914) 20 D. L. R. 134 338 Harwich Harbour Docks, In re (1876) 45 L. J. Ch. 56 795 Hastie's Case (1869) L. R. 4 Ch. 274 787 Hatherton v. Temiscouta Ry. Co. (1897) Q. R. 12 S. C. 481 399, 400, 401, 413 Hatzic Prairie Co., Ltd., Re (1915) 15 D. L. R. 772 756 Haven Gold Mining Co., In re (1882) 20 Ch. D. 151 700 Hawkins, E p. (1868) 3 Ch. 787 747, 802 Hawley v. Brumagim (1867) 33 Cal. 394 5 Haycock's Policy, Re (1876) 1 Ch. 611 850 Haycraft, etc., Co., Re (1900) 2 Ch. 230 145, 490, 518 Hayter Granite Co.. L. R. 1 Ch. 77 812 Head's Case (1866 ) L. R. Eq. 84 315 TABLE OF CASES. XXXIX Hea — Hod PAGE Hearle v. Rhind (1878) L. C. J. 239; 1 L. N. 101 Q. B 113 Heath v. Erie R. Co.. 8 Blatch. 347 523 Hebb's Case (1868) L. R. 4 Eq. 9 786 Hedican v. Crow's Nest Pass (1914) 17 D. L. R. 1164 144 Helwig V. Siemon (1916) 10 0. W. N. 296 90, 111, 337 Hemming v. Maddick (1872) L. R. 7 Ch. 395 167 Henderson v. Bank of Australasia (1890) 45 Ch. D. 330 517 Henderson v. C. P. R. (1916) 30 D. L. R. 62 861, 872 Henderson v. Lacon (1867) L. R. 5 Eq. 249 197 Henderson v. Strang (1919) 43 O. L. R. 617; (1919) 45 0. L. R. 215 93, 95, 121, 507 Hendrie v. G. T. R., 2 O. R. 441 10 Hendriks v. Montagu (1881) 17 Ch. D. 638 , 62 Henry v. Great Northern R. Co. (1857) 4 K. & J. 1 524 Henry v. Great Northern Ry. Co. (1857) 1 De G. & J. 606 436 Henry Pound, In re (1889) 1 Megone 279 410 Henthorn v. Eraser (1892) 2 Ch. 27 '. 242 Hepburn v. Connaught Park (1916) 10 0. W. N. 333 87, 90 Herbert v. Evans (1909) 13 O. W. N. 632, 682 511 Hercynia Copper Co., Re (1894) 2 Ch. 403 787 Hereford R. Co. v. The Queen (1894) 24 S. C. R. 1 485 Heritage's Case (1870) L. R. 9 Eq. 5 788 Herman v. Wilson (1901) 32 O. R. 60 508. 509 Heme Bay Water Works Co. (1878) 10 Ch. D. 42 711, 712 Herold v. Budding (1916) 37 O. L. R. 605 321 Heslop V. Paraguay Central Ry. (1910) 54 S. J. 234 404 Hess, In re (1891) 21 A. R. 66 210 Hess, Re (1894) 23 S. C. R. 644 156, 157, 205, 207, 209, 210, 211, 469, 479, 782, 859, 876 Hester & Company, 44 L. J. Ch. 757 593 Heyden. In re, 29 U. C. Q. B. 202 828, 831 Heyes Bros, Re (1915) 8 0. W. N. 390 718 Hibbert v. Cooke. 1 Sim. & Stu. 552 434 Hichens v. Congreve (1828) 4 Russ. 562 523 Hicks V. Borough of Lanceston, 1 Rolle Abr. 514 444 Hicks V. Powell (1874) L. R. 4 Ch. 741 365 Higginbotham's Case (1906) 12 O. L. R. 112 233 Higgins V. Lansingh (1895) 154 111. 301 5 Highway Advertising Co. v. Ellis (1904) 7 O. L. R. 504 210 Hilder v. Dexter (1902) A. C. 474 235 Hill's Case (1905) 10 O. L. R. 501 231 Hill's Case (1874) L. R. 20 Eq. 585 799 Hill V. Ingersoll, &c., Co. (1900) 32 0. R. 194 121, 126 Hill V. Manchester Waterworks (1833) 5 B. & Ad. 866 559 Hill V. Starr Manufacturing Co. (1914) 15 D. L. R. 146 106 Hinds V. Buenos Ayres Grand National Tramways (1906) 2 Ch. 654 258 Hinchley v. Gildersleeve (1872) 19 Gr. 212 105 Hindlf-y's Case (1806) 2 Ch. 121 787 Hirsche v. Sims (1894) A. C. 654 471, 497 Hoare's Case, 2 J. & H. 229 167 Hoare &c.. Co.. Ltd., In re (1904) 2 Ch. 208 270 Hobbs & Kennabeek, &c.. Co., Re (1918) 14 0. W. N. 358 736, 737 Hodge's Distillery. Re (1877) L. R. 6 Ch. 51 805 Xl TABLE OF CASES. Hod— Hoy PAGE HodKins v. O'Hara, 22 Occ. N. 29, 133 241 Hodskinson v. National Live Stock Ins. Co. (1859) 4 DeG. & J. 422 ; 523 Hodson V. Tea Co. (1890) 14 Ch. D. 859 406 Hogaboom's Case (1897) 24 A. R. 470 778 Hogaboom's Case (1897) 24 A. R. 470; 28 S. C. R. 192 879 Hogaboom's Case, 19 C. L. T. 66 853, 854 Holden, Ex p. (1869) L. R. 8 Eq. 444 797 Holladay, M. A. Co., Re (1915) 7 O. W. N. 321 718 Hollinsworth's Case (1849) 3 DeG. & Sm. 102 802 Hollis V. Allan (1866) 14 W. R. 980 432 Holmes v. French (1898) 1 Ir. 319 129 Holmes v. Higgins (1822) 1 B. & C. 74 213 Holmes v. Stewiacke Railway Co. (1899) 32 N. S. R. 395 548 Holmested v. Annable (1914) 18 D. L. R. 3 473 Holthausen, Ex p., L. R. 9 Ch. 722 365 Holyford Mining Co. (1867) L. R. 3 Eq. 208 805 Home Assurance Association, Re (1871) L. R. 12 Eq. 112 711, 725 Home Assurance Association, In re (1871) L. R. 12 Eq. 59. .723, 725 Home Investment Society, Re (1880) 14 Ch. D. 167 723, 834 Houck V. Town of Whitby, 14 Gr. 671 122, 127 Honsberger v. Weyburn Townsite (1920) 50 D. L. R. 147 27 Hoole V. Great Western Ry. Co. (1867) L. R. 3 Ch. 262 419 Hooper v. Herts (1906) 1 Ch. 549 336, 338 Hooper v. Kerr Stuart (1900) 83 L. T. 729 518 Hope V. Glass (1863) 23 U. C. R. 86 106 Hope V. Glass (1863) 23 U. C. R. 86 106 Hupital du Sacre Coeur v. Lefebvre, 17 Q. L. R. 35 142 Hopkins v. Hamilton Electric (1910) 2 O. L. R. 240 95 Hopkins' Trust (1874) L. R. 18 Eq. 696 432 Hopkinson v. Mortimer, Harley & Co., Ltd. (1917) 1 Ch. 646... 308 Horbury Bridge Coal Co., Re (1879) 11 Ch. D. 109 520, 530 Horsey's Claim, In re, L. R. 5 Eq. 561 812 Hough Lithographing Co., Re (1915) 8 O. W. N. 377 719 Houghton Land Corporation v. Ingham (1914) 24 Man. R. 497.. 130 Houldsworth v. City of Glasgow Bank (1880) 5 App. Cas. 317. . 149, 194, 198, 734 Houldsworth v. Yorkshire Woolcombers' Association (1904) A. C. 355 390 Household Fire Ins. Co. v. Grant (1879) 4 Ex. D. 216 241, 788 Hovenden's Case (1884) 10 P. R. 434 783, 788 Hovey v. Whiting (1886) 14 S. C. R. 515 105, 483 Howard's Case (1866) L. R. 1 Ch. 561 788, 789 Howard v. Canadian, &c., Co. (1914) 6 0. W. N. 285, 404.... 192, 199 Howard v. Dingman (1907) 10 0. W. R. 127 216 Howard v. Hill (1889) 37 W. R. 219 528 Howard v. Patent Ivory Mfg. Co. (1888) 38 Ch. D. 156 120, 132. 372, 376, 379, 490 Howard v. Sadler (1893) 1 Q. B. 1 446 Howarth v. Singer Mfg. Co. (1893) 8 A. R. 264 482 Howbeach Co. v. Teague (1860) 5 H. & N. 151 284, 531 Howell Lithographic Co. v. Brethouer (1899) 30 O. R. 204 152, 499 Hoyland and Silkstone Colliery Co.. Re (1884) W. N. 13 752 Hoylake Ry. Co., Re, Ex p. Littledale (1874) L. R. 9 Ch. 257... 324 TABLE OF CASES. xli Hub — Imp PAGE Hubbard, Re (1898) 68 L. J. Ch. 54 379, 382 Hubbard & Co.. Re (1898) W. N. 158 394 Hudson Bay Ins. Co. v. Creelman (1918) 40 D. L. R. 274; (1919) 48 D. L. R. 234 (P.O.) 110 Hughes' Claim, 13 Eq. 623 808 Hughes V. Canada Permanent (1876) 39 U. C. Q. B. 221 131 Hughes & La Compagnie de Villas du Cap Gibralter et LMonde (1889) 5 M. L. R. S. C. 129 161 Hughes V. Northern Electric and Manufacturing Co., Ltd. (1015) 50 S. C. R. 626 101, 359, 361 Hull & County Bank, Re (1876) 10 Ch. D. 130 722 Humber Iron Works Co. (1868) 16 W. R. 474, 667 364 Humber Iron Works Co. (1866) L. R. 2 Eq. 15 722 Humber Iron Works Co.. L. R. 8 Eq. 122 813 Hung Man v. Ellis (1895) 3 B. C. R. 486 217 Hunt V. Great Northern Ry. Co. (1891) 1 Q B. 601 508 Hunt V. Wimbledon (1879) 4 C. P. D. 48 122 Hutchinson's Case [1895] 1 Ch. 226 786, 787 Hutton V. West Cork Ry. Co. (1883) 23 Ch. D. 654 499, 500, 501 Hyde v. Scott (1919) 47 D. L. R. 260, 267 431 Hyde v. Thibaudeau (1911) Q. R. 20 K. B. 200; (1910) 11 P. R. 419 767 Hyman v. Cuthbertson (1886) 10 O. R. 433 839 I. Ibex Co., Re (1902) 9 B. C. R. 557 828 Ibo, etc.. Co., Ltd., In re (1904) 1 Ch. 26 723 Ideal Foundry and Hardware Co., Re (1918) 42 O. L. R. 411 757 Ideal House Furnishers and Winnipeg, Re (1909) 18 Man. R. 650 812, 813 Ideal House Furnishing Co., In re, Stewart McDonald Co. Case (1907-8) 17 Man. L. R. 576 831 llfracombe, etc.. Building Society, In re (1901) 1 Ch. 102 697 Imperial v. Provost (1910) 11 Que. P. R. 150 861 Imperial Continental Water Corporation, In re (1886) 33 Ch. D. 314 862 Imperial, etc.. Association v. Coleman (1871) 6 Ch. 558 476 Imperial, etc.. Co. v. Coleman (1873) L. R. 6 H. L. 189 477 Imperial, etc., Co. v. Hampson (1882) 23 Ch. D. 9 517 Imperial Bank v. Farmers Trading Co., 13 Man. L. R. 412 ..119, 139 Imperial Bank v. Bank of Hindustan of China, L. R. 6 Eq. 91 . . 593 Imperial Canadian Trust Co. v. Vallance (1915) 24 D. L. R. 241 396, 397 Imperial Guardian Life, Re (1870) L. R. 9 Eq. 447 713 Imperial Ilydropathie Holel Co., Re (1882) 49 L. T. ] 17.690,691. 711 Imperial Land ("o. of Marseilles, In re (1870) L. R. 6 Ch. 90 762 Imperial Land Co. of Marseilles. Re (1882) W. N. 173 864 Imperial Mercantile Credit Co., In re (1867) L. R. 5 Eq. 264 861 Tmpfrial Mercantile Credit Association. L. R. 12 Eq. 504 593 Imperial Paper Mills, Re. Diehl v. Carritt (1915) 7 O. W. N. 630. 810, 826 Imperial Paper Mills v. Quebec Bank (1910) 2 0. W. N. 1500, 1502 409 Xlii TABLE OF CASES. Imp— Ive PAGE Imperial Silver Quarries, Re (ISliS) 16 W. 11. 1220 708 Imperial Starch Co., In re (1905) 10 0. L. R. 22 113, 325 ImptM-ial Steel and Wire Co., Ltd. (191!)) 17 0. W. N. 11 725 Imperial Wine Co., In re, Shereft's Case (1872) L. R. 14 Eq. 417 733 Ince Hall Rolling Mills Co. v. Douglas Forge Co. (1882) 8 Q. B. D. 179 768, 817 Inchiquin, Lord, Ex p. [1891] 3 Ch. 28 787 Ind's Case (1872) L. R. 7 Ch. 485 334 Ind. Coope & Co., In re (1911) 2 Ch. 223 392 Indemnity Case, The, Albert Arbitration; Riley, at p. 17 593 Independent Order v. United Order (1896) 94 Wis. 234 13 Indian Zoedone Co. (1884) 26 Ch. D. 70 526, 529 Ingersoll & Thamesford Gravel Road Co. v. McCarthy (1858) 16 U. C. R. 162 226 Inglis V. Wellington (1875) 29 U. C. C. P. 387 157, 163 Ings V. Bank of Prince Edward Island (1884-86) 11 S. C. R. 265. 848 Innes & Co., Re (1903) 2 Ch. 254 156 Inns of Court Hotel Co.. Re (1868) L. R. 6 Eq. 82 372, 844 Installations, Ltd., Re (1913) 14 D. L. R. 679 689, 730 Institut Canadien v. Le Nouveau Monde (1873) 17 L. J. C. 296. . 149 International Casualty Co. v. Thompson (1913) 48 S. C. R. 167; 11 D. L. R. 634 199, 235, 247 International Contract Co., Re (1866) L. R. 1 Ch. 523 752 International Contract Co., Re (1869) 17 W. R. 454; 20 L. T. 96.. 104 International Contract Co., Re (1866) 14 L. T. 726 712, 713 International Contract Co., Hankey's Case (1872) 26 L. T. 358.. 771 International Contract Company, In re, Hughes' Claim (1872) L. R. 13 Eq. 623 731 International Electric Co., Re McMahan's Case (1914) 31 0. L. R. 348 558, 719, 881 International Mercantile Agency, Re (1906) 7 O. W. R. 795 809 International Mining Syndicate, The v. Stewart (1914-5) 48 N. S. R. 172 87, 491, 731 International Pulp and Paper Co., In re (1876) 3 Ch. D. 594. 727, 742 International Trap Rock Co., Re (1915) 8 O. W. N. 461 718 International Trap Rock Co., Ltd., Re (1915) 8 0. W. N. 599... 410, 411, 744 International Wrecking Co. v. Murphy (1888) 12 P. R. 423 548 Inventors Association, Re (1865) 2 Dr. & Sm. 553 713 Investment Trust, Ltd., In re (1904) 1 Ch. 26 722 Investors, Re, Ball's Case (1918) 3 W. W. R. 180 247 Ireland & Co., David, In re (1905) 1 Ir. 133 871 Ireland v. Hart (1902) 1 Ch. 552 340 Irish Provident Assurance Co., Ltd. (1913) 1 Ir. 352 865, 866 Iron Clay Mfg. Co., Re (1889) 19 0. R. 113 469, 470, 473, 694 Iron Ships, etc., Co. v. Blunt (1868) L. R. 3 C. P. 484 449 Irvine v. Union Bank of Australia (1877) 2 App. Cas. 366 376 Irwin v. Lessard (1889) 17 R. L. 589 214 Isaac's Case (1892) 2 Ch. 158 787 Isle of Wight Ferry Co., Re (1865) 2 H. & M. 597 710 Isle of Wight Ry. v. Tahourdin (1883-4) 25 Ch. D. 332 456, 517 Ivey V. Knox, 8 0. R. 451 841 TABLE OF CASES. xllil J. Jac — Jou PAGE Jackson. In re [1899] 1 Ch. 348 793 Jackson v. Bowman (1867) 14 Gr. 156 839 Jackson v. Cannon (1903) 10 B. C. R. 73 368, 765 Jackson & Shaw's Case (1867) W. N. 226 789, 790 Jacobus Marler Estates, Lim. v. Marler (1916) 85 L. J. P. C. 167. 480 Jamal v. Moolla Dawood Sons & Co. (1916) 85 L. J. P. C. 29 ... 339 James, Ex p. (1880) 5 L. R. Ir. 139 794, 795 James v. Eve, L. R. 6 H. L. 385 593 Jasper Liquor Co., Re (1915) 23 D. L. R. 894 156 Jeaffreson, Ex p. (1871) 11 Eq. 109 783 Jefferson v. Pacific Coast Co. Mines, Ltd. (1916) 31 D. L. R. 557. 367 Jenkins v. Wilcock (1862) 11 C. P. 505 547 Jenner's Case (1876) 17 Ch. D. 132 445 Jennett v. Sinclair (1876) 10 N. S. 392 123 Johannesburg Co. [1891] 1 Ch. 110 796 Johannesburg Gold Trust Co., Re (1892) 1 Ch. 583 752 John Deere Plow Co. v. Wharton (1914) 18 D. L. R. 353; (1915) A. C. 320; 84 L. J. P. C. 64 25, 26, 97 John Deere Plow Co. v. Wharton (1915) A. C. 330 399 John Palmer Co. v. Palmer-McLellan (1917) 37 D. L. R. 201.. .60, 62 Johnson v. Hope, 17 A. R. 10 841, 842 Johnson v. Johnson (1913) 14 D. L. R. 756 189, 190 Johnson v. Lyttle's Iron Agency (1877) 5 Ch. D. 687 283, 299 Johnson v. Roche (1915) 24 D. L. R. 305, reversed 53 S. C. R. 18 339 Johnson v. Russian Spratts' Patent (1898) 2 Ch. 149 364 Johnston v. Carlin (1914) 20 B. C. R. 520 480 Johnston v. Chestergate (1915) 84 L. J. Ch. 914 543 Johnston v. Consumers Gas Co. (1895) 27 O. R. 9 524 Johnston and Toronto Foundry Co. v. Consiimers' Gas Co. (1898) A. C. 447 551 Johnston v. Ewart (1907) 31 Que. S. C. 336 201, 741 Johnston v. Hamilton, 13 U. C. R. 211 147 Johnston v. Thompson (1914) 15 D. L. R. 546 522 Johnston v. Wade (1908) 17 O. L. R. 372. . .362, 369, 376, 390. 392, 396, 397, 441, 450 Joint Stock Coal Co., Re (1869) L. R. 8 Eq. 146 686 Joint Stock Discount v. Brown (1869) L. R. 8 Eq. 381 36, 218. 467 Jones, D. A. Co., Re (1891-2) 19 A. R. 63 853 Jones, In re; Clegg v. Ellison (1898) 2 Ch. 83 59 Jones V. Kinney, 11 S. C. R. 708 842 Jones V. Miller (1893) 24 0. R. 268 156. 164 Jones V. Montreal Cotton Co., 24 L. C. J. 108, 1 L. N. 450 157 Jones, Lloyd & Co., Re (1889) 41 Ch. D. 159 796 Jones and Moore Electric (1908-9) 18 Man. L. R. 549 109, 543. 819 Jones V. Municipality of Albert (1881 ) 21 N. B. 200 382 Jones V. North Vancouver, etc., Co. (1910) A. C. 317 288 Jones Pacaya Rubber (1911 ) 1 K. B. 455 295 Jones V. Victoria Graving Dock Co. (1877) 2 Q. B. D. 314 132 Joseph V. Morton (1916) 26 D. L. R. 433 821 .Joshua Stubbs. T>td.. In re (1891) 1 Ch. D. 475 411, 825 Journal Printing Co. v. McLean (1894) 25 0. R. 509 549 Xliv TABLE 01'^ CASES. K. Kal— Kra gage Kahis V. H^iTgert (1875) 1 A. R. 75 ' 838, 842 Karberg's Case (1891') 3 Ch. 1 196, 197, 790 Karr v. South Side Lumber Co. (1916) 28 D. L. R. 739 420 Kaye v. Croydon (1898) 1 Ch. 358 476, 517 Kearns Ink. etc., Co., Anglin. J. (1907), unreported 692 Keating v. Graham (1894) 26 O. R. 361 739 Kellock V. Enthoven (1874) L. R. 9 Q. B. 241 339 Kelly's Case (1884) 7 O. R. 204; 12 A. R. 486 785, 787 Kelly V. Electrical (1908) 16 0. L. R. 232 457, 458, 459, 461, 482, 492, 529 Kelner v. Baxter (1866-7) L. R. 2 C. P. 174 119 Kendall v. Webster (1909-10) 15 B. C. R. 268 774 Kennedy, Re, 36 U. C. R. 464 809 Kennedy v. Acadia Pulp and Paper Mills Company, Limited, (1905) 38 N. S. R. 291 193, 435 Kent's Case (1888) 39 Ch. D. 259 796 Kent Coal Fields Syndicate, In re (1898) 1 Q. B. 754 534 Kent V. Blandy & Provost (1896) 19 Q. R. (S. C.) 255 765 Kent V. Communaute des Soeurs de la Providence (1903) A. C. 220 731, 758, 764, 767, 873 Kent V. Community (1901) Q. R. 19 S. C. 556 765 Kent V. Freehold (1867) L. R. 4 Eq. 588 790 Kent V. Freehold Land Co. (1868) L. R. 3 Ch. 493 787 Kentmere, In re Sailing Ship (1897) W. W. 58 701 Keptigalla Rubber Estates v. National Bank of India (1909) 2 K. B. 1010 145 Kettle River Mines v. Bleasdell (1900) 7 B. C. R. 507 8, 158 Keyes v. Hanington (1913) 13 D. L. R. 139 769, 833 Kharaskhoma Exploring Syndicate, In re (1897) 2 Ch. 451. .793, 795 Klely V. Kiely (1878-9) 3 A. R. 438 444, 455 Kiely v. Smith (1879) 27 Gr. 220 332, 447 Kindsgrove Steel Co. (1894) W. N. 25 818 King's Case (1871) L. R. 6 Ch. App. 196 171, 784 King v. Beamish (1916) 30 D. L. R. 116 122, 123 King's Cross Industrial Dwellings Co. (1870) L. R. 11 Eq. 149. 710, 711 Kingston Arbitration, Re (1902) 3 0. L. R. 637 9 Kingston Cotton Mills Co., Re (No. 2) (1896) 2 Ch. 279 542, 866 Kingston Miller v. Thomas Kingi5ton (1912) 1 Ch. 575 61 Kingston Street Ry. v. Foster (1886) 44 U. C. R. 552 249 Kinney v. Plunkett (1894) 26 N. S. R. 158 303 Kinver v. Phoenix Lodge. I. 0. 0. F. (1885) 7 O. R. 377 550 Kipling V. Todd (1878) 3 C. P. D. 350 75 Kirby's Case (1882) 46 L. T. 682 794 Kirby v. Rathbun, 32 0. R. 9 840, 841 Kirkpatrick v. Cornwall Electric Ry. (1901) 2 O. L. R. 113 107 Kitching v. Hicks (1884) 6 0. R. 739 396, 761 Knowles v. Scott (1891) 1 Ch. 717 759 Kootenay Brewing Co., Re (1896-99) G B. C. R. 112 703. 704. 707 Kootenay Brewing Co., Re (1900) 7 B. C. R. 131 683 Kootenay Valley Co., Ltd., Re (1912) 3 D. L. R. 428 758 Krasnapolsky Co., Re (1892) 3 Ch. 174 710 TABLE OF CASES. xlv Kre — Lan page Kreglinger v. N-ew Patagonia, etc., Co. (1914) A. C. 25 406 Kruger v. Harwood (1907) 16 Man. L. R. 433 238, 241, 242 Kurtz V. McLean (19U8) 11 0. W. R. 437 ,. . .740, 875, 876 L. Lacey & Co., Re (1877) 46 L. J. Ch. 660 717 Lady Bryan Co., In re (1870) 1 Sawy. 349 6 Lady Forrest & Co., Ltd., Re (1901) 1 Ch. 582 211 Lafferre v. Banque St. Jean (1911) 17 Rev. Leg. N.S. 428 766 Lafleur v. St. Amour (1909) Q. R. 18 K. B. 400 785 Lagunas, etc., Co. v. Lagunas Syndicate (1899) 2 Ch. 392 33, 471, 492 Lagunas Nitrate v. Schroeder (1901) 85 L. T. 22 419 Laing v. Taylor (1876) 26 U. C. C. P. 416 148 Laing Packing, etc., Co. v. Laing (1904) Q. R. 25 S. C. 344.... 61 Lake Manufacturing, etc., Co. Re (1893) 9 M. R. 342; 13 C. L. T. 81 720 Lake Ontario NavigaUon Co., Re, Davis's Case (1910) 20 O. L. R. 191 242, 249, 280 Lake Ontario Navigation Co., Re, Hutchinson's Case (1909) 3 0. W. R. 1037 493 Lake Superior Native Copper Co., Ltd., In re. Re Plummer (1885) 9 O. R. 277 743, 855 Lake Superior Navigation Co. v. Morrison (1872) 22 U. C. C. P. 217 2, 240, 787 Lake Winnipeg, etc., Co., Re (1891) 7 Man. L. R. 255 682, 686, 688, 689, 703, 709, 715 Lake Winnipeg Transportation Co., Re, Paulson's Claim (1891) 7 Man. R. 602 511, 741 Lake Winnipeg TransportaUon Co. Re (1892) 8 Man. R. 463 824 Lamb, Re (1866) 4 P. R. 16 846 Lamb, William, Mfg. Co., Re (1900) 32 0. R. 243 688 Lambert v. Neuchatel Asphalte Co. (1882) 30 W. R. 914 537 Lamontagne v. Girard (1911) Q. R. 39 S. C. 179 61 Lancashire Cotton Spinning Co. v. Greatorex (1866) 14 L. T. 290. 864 Land Credit Co. of Ireland, In re, 4 Ch. App. 288 138 Land Credit Co. of Ireland v. Lord Fermoy (1870) L. R. 5 Ch. 772 493 Land Credit Co. of Ireland, Weikersheim & Co.'s Case (1873) L. R. 8 Ch. 831 348 Land Development Association, Re (1892) W. N. 23 752 Land Rfgistration Act, In re (1901-4) 10 B. C. R. 370 395 Land Shipping Co., Re (1868) 18 L. T. 786 786 Landowners West of England, etc., R. Co. v. Ashford (1880) 16 Ch. D. 411 372 Lands Allotment Co., In re (1894) 1 Ch. 616 33, 218, 495 Lands and Homes of Canada, Re, Robertson's Case (1919) 44 D. L. R. 325 115- 453 Langer's Case (1868) 37 L. .1. Ch. 292 787 Langevin v. The Stadium Co. (1917-8) 19 Que. P. R. 245 697 Langham Skating Rink Co. (1877) 5 Ch. D. 669 704 Langman v. Bath Electric Tramways (1905) 1 Ch. 646 348 xlvi TABLE OF CASES. Lau — Liu PAGE Lansley Mill Steel, etc.. Co. (1871) L. K. 12 Eq. 26 712 Lapierre v. Banque St. Jean (1911) 17 R. L. N. S. 428 767 Larking, Re. 4 Ch. 566 813 Larocque v. Beaiichemin (1897) A. C. 358 67, 165, 796 Larue v. Dohan (1915) 48 Que. S. C. 374 838, 843, 84S Laurie Engine Co., Re. 7 Que. P. R. 431 773, 777 Laurie Engine Co., Re (1906) 8 Que. P. R. 59 777, 833 Lavell V. Canadian Mineral Rubber Co. (1914) 14 D. L. R. 521. . 737, 738, 748 Lawford v. Billericay (1903) 1 K. B. 772 125 Lawless v. Anglo-Egyptian Cotton and Oil Co. (1869) L. R.. 4 Q. B. 262 520 Lawlor v. Linden (1876) Ir. R. 10 C. L. 188 508 Lawrence v. West Somerset Mineral Railway (1918) 2 Ch. 250. 425 Lawson v. McGeoch. 22 O. R. 474 ; 20 A. R. 464 840, 842 Laxon & Co. (1892) 3 Ch. 555 12, 545 Lazier v. McCullough (1912-13) 6 Alia, L. R. 503 217 Leadley v. Union Stock Yards (1915) 8 0. W. N. 516 335 Lebel v. Security Life Insurance Co. (1915) 47 Que. S. C. 238.. 440 Leduc V. Kensington Land Co. (1900) 16 R. J. Q. 213 (S. C) . . . 715 Ledwell v. Charlottetown Light & Power Co. (1913) 13 E. L. R. 225 130, 143 Lee V. Friedman (1910) 20 0. L. R. 49 507, 509, 511, 815 Lee V. Neufchatel Asphalt Co. (1889) 41 Ch. D. 1 419, 424 Lee V. Roundwood Colliery (1897) 1 Ch. 373 394 Leeds Estate, Building and Investment Co. v. Shepherd (1887) 36 Ch. D. 787 424, 540, 541 Leeling v. Insurance Co., 45 Barb. 510 432 Leeds & Hanley Theatres of Varieties (1902) 2 Ch. 809 208, 209, 210, 211, 479, 868 Lefebvre v. Prouty (1918) 54 Que. S. C. 490 182 Leifchild's Case (1865) L. R. 1 Eq. 231 167 Leifchild's Case (1865) 11 Jur. (M.S.) 941 797 Leighton v. B. C. Electric Co. (1914) 17 D. L. R. 117; (1914) 18 D. L. R. 505 96 Leiser v. Popham Bros., Ltd. (1912) 6 D. L. R. 525 184 Lenora Mount Sicker Co., The, In re (1900-3) 9 B. C. R. 471.. 738, 743, 824, 833 Leslie v. Canadian Birkbeck Co. (1913) 10 D. L. R. 629 436 Letheby. Re (1909) 1 Ch. 815 334 Levi & Co., Ltd., In re (1919) 88 L. J. Ch. 233 749 Levi V. Ayres (1878) 3 App. Cas. 842 339 Levis County Ry. v. Fontaine (1904) Q. R. 13 K. B. 523. .377, 304, 412 Levita's Case (1867) 3 Ch. App. 36 241 Levita's Case (1870) L. R. 5 Ch. 489 787 Lewis V. Roberts (1861) 11 C. B. N. S. p. 29 556 Leys. Re (1911-12) 3 0. W. N. 464 433 Licensed Victuallers' Association, Re (1889) L. R. 42 Ch. D. 1.. 11 Limehouse Co., In re, Coates' Case (1874) L. R. 17 Eq. 169 795 Lincoln Paper Mills Co. v. St. Catherines R. Co. (1890) 19 0. R. 106 370 Linde Canadian Refrigerator Co. v. Saskatchewan Creamery Co. (1915) 51 S. C. R. 400 97 Lindsay v. Imperial Steel and Wire Co. (1910) 21 0. L. R. 375. 234 TABLE OF CASES. xlvii Lin — lion PAGE Lindsay-Walker v. Wilson (1916) 27 D. L. R. 233 147 Liquidator of the Monarcli Oil Co. v. Chapin (1917) 37 D. L. R. 772 238, 766 Lisbon Steam Tramways Co., Re (1875) W. N. 54 864 Lister & Co., Henry, Re (1892) 2 Ch. 417 824 Litchfield v. Saskatchewan, etc., Co. (1907-8) 7 W. L. R. 475.. 466 Liverpool Household Stores Ass'n, Re (1890) 59 L. J. Ch. 616.. 486, 494 Liverpool Household Stores v. Smith (1887) 37 Ch. D. 170 520 Liverpool Marine Credit Co. v. Hunter (1867) L. R. 4 Eq. 62; 3 Ch. 479 365 Liverpool Temperance Colonization Society (1890) 17 A. R. 379 303, 304 Llangennech Coal Co., In re (1887) 56 L. T. 475 768 Llewellyn v. Kasintoe Rubber Estates (1915) 84 L. J. Ch. 70 289 Lloyd V. David Lloyd & Co. (1877) 6 Ch. 339 410, 411, 743, 825 Lloyd V. Grace Smith & Co. (1912) W. N. 213 145 Lloyd Generale Italiano, Re (1885) 29 Ch. D. 219 695 Lock V. Trotman (1896) A. C. 461 291 Locke & Smith. Ltd., In re (1914) 1 Ch. 687 401 London and Birmingham Banking Co. (1865), 34 Beav. 332 322 London & Birmingham Flint Glass Co., Re (1859) 1 D. F. & J. 257 715 London & Bombay & M. Bank. Re, L. R. 1 Ch. 525 752 London & Caledonia Co., Re (1879) 11 Ch. D. 140 697 London & Canadian Loan and Agency Co. v. Duggan (1893) A. C. 506 264, 340, 341 London & Canadian Loan, &c., Co. v. Graham (1888) 16 0. R. 329 110 London Celluloid Co., In re (1888) 39 Ch. D. 190 761, 798 London & Counties, etc., Co. v. Brighton (1915) 84 L. J. K. B. 991 ; 2 K. B. 493 449 London, etc.. Hotel Co. (1892) 1 Ch. 639 808, 825, 826 London Fence (No. 1), Re (1911) 21 Man. R. 91 764, 874 London Founders' Association (1888) 20 Q. B. D. 576 336 London, etc., Co. v. New Mashonaland Co. (1891) N. W. 165.. 469 London Flour Co.. Re (1868) 16 W. R. 553 756 London Gas Co. v. Campbell (1856) 14 U. C. R. 143 288 London and General Bank (No. 2), In re (1897) 2 Ch. 673 424. 497, 540, 541 London India Rubber Co.. In re (1867-8) 5 Eq. 519 259, 835 London Life Assurance Co. v. Wright (1880) 5 S. C. R. 466 125 London & Merc. Discount Co., Re (1865) L. R. 1 Eq. 277 523 London & Mediterranean Banking Co., Re (1866) 15 W. R. 33 .. 753 London Metallurgical Co.. Re (1895) 1 Ch. 758 724. 776 London Marine Association, Re (1870) L. R. 8 Eq. 176 850 London and New York Invcstiiipnt Corporation, In re (1895) 2 Ch. 860 271 London & Northern Bank, McConnell's Claim (1901) 1 Ch. 728. 449. 502 London and Northern Steamship Co. v. Farmer (1914) 58 S. J. 594 291 London & Paris Banking Corporation, Re (1874) 19 Eq. 444.691, 711 London Pressed Hinge Co., In re (1905) 1 Ch. 576 409 Xlviii TABLE OF CASES. Lon — Mac PACK London & Provincial Co., Re (1877) 5 Ch. D. 525 224 London & Soutliern, etc., Co., Re (1885) 31 Ch. D. 223 788 Loudon & Suburban Bank Co., Re (1871) 19 W. R. 950 727 London, etc., Ry- Co., In re and Township of E. Wawanosh (1875) 3G U. C. Q. B. 93 438 London Speaker Printing Co., Re (1889) 16 A. R. 508 224, 227, 256, 784, 785, 786, 787 London Speaker, In re, Pearce's Case (1889) 16 A. R. 508.. 9, 683, 786 London Trust Co. v. McKenzie (1893) 62 L. J. Q. B. 870 333 London & Westminster Wine Co. (1863) 12 W. R. 6 692 London Wharfing & Warehousing Co. (1865) 35 Beav. 37 711 London Windsor Co. [1892] 1 Ch. 639 809 Londonderry Ry. Co., Re (1849) 13 Q. B. 998 290 Long V. Guelph Lumber Co. (1880) 31 U. C. C. P. 129 257 Long V. Hancock (1885) 12 S. C. R. 532 370 Long V. Hancock, 12 A. R. 137 841 Longendale Cotton Spinning Co., Re (1878) 8 Ch. D. 150. . .409, 743, 825 Loog, Limited, Hermann, In re (1887) 36 Ch. D. 502 742 Looker v. Wrigley (1882) 9 Q. B. D. 397 102 Lord V. Canadian Last Block Co. (1917) 51 Que. S. C. 499 359 Lorsch & Co. v. Shamrock Consolidated (1917) 39 0. L. R. 315; 36 D. L. R. 557 312, 617, 655 Lowe's Case (1870) L. R. 9 Eq. 589 783 Lowndes v. Garnett (1864) S3 L. J. Ch. 418 360 Lubbock V. British Bank of South America (1892) 2 Ch. 198 ... 421 Lucas V. North Vancouver (1913) 12 D. L. R. 802; 18 B. C. R. 239 446 Ludlow Corporation v. Charlton (1840) 6 M. & W. 815 126 Lundy Granite Co., Re (1872) 26 L. T. N. S. 673 501 Lundy Granite Co., In re. Ex p. Heaven (1871) L. R. 6 Ch. 462 748, 749 Lyden v. Magee (1888) 16 0. R. 105 548 Lydney and WMgpool Co. v. Bird (1886) 33 Ch. D. 93 205 Lynch v. William Richardes Co. (1905-S) 38 N. B. R. 160 96 Lynde v. Anglo-Italian Hemp Spinning Company (1896) 1 Ch. 178 197 Lyster's Case (1867) L. R. 4 Eq. 233 490 M. MacArthur v. Town of Portage la Prairie (1893) 9 M. R. 588 ... 370 MacBride v. Lindsay, 9 Hare 573 78 Macdonald v. Bank of Vancouver (1916) 25 D. L. R. 567 313, 317 Macdonald v. Drake (1906) 16 Man. L. R. 220 446, 460, 461, 495, 507, 512 Macdonald v. Godson (1916) 31 D. L. R. 363 501 Macdonald v. Mail Printing Co. (1876) 6 P. R. 309 322, 335 MacDonald v. McBeth. 11 U. C. C. P. 224, 228 442 Macdonald v. Montreal and New York Ry. Co. (1856) 6 L. C. R. 232 335 Macdonald. Sons & Co. [1894] 1 Ch. 89 789 Macdougall v. Gardiner (1875) L. R. 10 Ch. 606 456, 514 Macdougall v. Gardiner (1876) 1 Ch. D. 13 367 Macdougall v. Montreal Warehousing Co. (1880) 3 L. N. 64 108 TABLE OF GASES. xlix Mac — Mar PAGE Mack's Claim (1900) W. N. 114 449 Mackay v. Commercial Bank of New Brunswick (1874) L. R. 5 P. C. 394 149 Mackenzie v. Maple Mountain Co. (1910) 20 0. L. R. 170 492, 504 Mackenzie v. Maple Mountain Co. (1910) 20 O. L. R. 615 491, 504 Mackenzie v. Monarch Life (1911) 45 S. C. R. 232; (1913) 15 D. L. R. 695 142 Mack^enzie v. Montreal and Ottawa Ry. (1877) 27 U. C. C. P. 224. 377 Mackenzie v. Montreal and Ottawa Ry. (1878) 29 U. C. C. P. 333. 403 Mackereth v. Wigan Coal and Iron Co. (1916) 2 Ch. 293; 85 L. J. Ch 601 325 MacLeay v. Tait (1906) A. C. 24 182, 194 Mackley's Case (1875) 1 Ch. D. 247 224 Macklin v. Dowling (1890) 19 0. R. 441 694 Maclaren v. Fisken (1881) 28 Gr. 354 438 Maclaren v. Stainton (1861) 3 D. F. & J. 202 433 . Madden v. Cox (1880) 5 A. R. 473 496 Madden v. Dimond (1904-7) 12 B. C. R. 80 469, 470, 476, 488 Madras Irrigation Co., Re (1883) 23 Ch. D. 252 756 Madrid Bank v. Kelly (1869) L. R. 6 Eq. 442 723 Madrid and Valencia Ry. Co., Re (1849) 3 Dom. & Sm. 127 711 Magog Textile & Paint Co. v. Price (1887) 14 S. C. R. 664 . .224, 786 Mahoney v. East Holyford (1875) L. R. 7 H. L. 869 66, 102, 138. 139, 439, 460, 461 Major Hill Taxicab Co., Re v. City of Ottawa (1915) 7 O. W. N. 747 99 Maklns v. Percy Ibbotson & Sons (1891) 1 Ch. 133 417 Malam v. Kitchens (1894) 3 Ch. 578 432 Mallory's Case (1902) 3 0. L. R. 552 246, 249 Manchester v. Milford (1880) 14 Ch. D. 645 415 Manchester & London Life Assurance, etc.. Association, Re (1870) L. R. 9 Eq. 643 692 Manes Tailoring Co., In re, Crawford's Case (1909) 18 O. L. R. 572 866, 868 Manes Tailoring Co. v. Willson (1907) 14 O. L. R. 89 234, 250, 253, 257, 436, 443, 451, 452 Mangles v. Dixon (1852) 3 H. L. C. 702 383 Manitoba Commission Co. (1911-12) 22 Man. L. R. 268 859 Manitoba Commission Co., Re (1911-2) 19 W. L. R. 893 708 Manitoba Commission Co., Re (1912) 2 D. L. R. 1 483. 686. 687, 707, 708, 725 Manitoba Commission Co., Ltd., In re (1913) 9 D. L. R. 436.. 716, 718 Manitoba Milling Co., Re (1891) 8 M. R. 426 721 Maple Leaf Dairy Co.. Re (1901) 2 0. L. R. 590 718 Marchant v. Morton (1901) 2 K. B. 832 228 Marcotte v. Turcot (1901-2) 4 Q. P. R. 342 738 Marine Invf-stment Co. (1873) 8 Ch. 702 729 Marine Mansions Co., Re (1867) L. R. 4 Eq. 601 759 Maritime Bank v. Robinson (1866-7) 26 N. B. R. 297 848 Maritime Bank v. Troop (1887-8) 16 S. C. R. 456 801, 818, 820 Maritime Bank v. Receiver General (1892) A. C. 437 809 Maritime Trust Co. v. Alcock (1916) 22 B. C. R. 399 804 n.r.A. — n 1 TABLE OF CASES. Mar — McC PAGE .Maritime Trust Co.. Ltd..& Burns, Re (1916) 26 D. L. R. 442... 859 Maritime Wrapper Co., Re (1899-02) 35 W. B. R. 682 705, 706 Markle v. Ross (1889) 13 P. R. 135 752, 851 Marlborough Club. Re (1868) L. R. 5 Eq. 365 802 Marlborough Club Co., tn re; Ex parte Percival (1868) L. R. 6 Eq. 519 725 Marmora Foundry v. Jackson (1842) U. C. R. 509 298 Marmor, Ltd. v. Alexander (1908) S. 0. 78 462 Marquis of Bute's Case (1892) 2 Ch. 100 495. 869 Marsden v. Mlnnekahda Land Co. (1918) 40 D. L. R. 76 719, 851 Marseilles Extension Co., Re (1867) L. R. 4 Eq. 692 756 Marsh v. Sweeny. 15 N. B. 2, Pugsley 454 842 Marshall, Ex p., 7 Ch. 324 801 Marshall v. School Trust-ees of Kitley (1855) 4 C. P. 373 122 Martin v. Gibson (1908) 15 0. L. R. 623 233, 269, 470 Martin International Trap Rock Co., Re (1915) 8 O. W. N. 599. 410, 411, 744 Marzetti's Case. 28 W. R. 541 495 Masbach v. Anderson (1877) 26 W. R. 100 727 Maskelyne v. British Typewriter (1898) 1 Ch. 133 411, 413 Masonic & General Life Assurance Co., Re (1885), 32 Ch. D. 373. 714 Masonic & General Life, etc., Co. v. Sharp (1892) 1 Ch. 154 . .467, 870 Massawippi Valley Ry. Co. v. Walker (1871) 3 R. L. 450 69, 286 Massey, In re (1870T L. R. 9 Eq. 367 723, 776 Masson v. McGowan, 2 L. C. L. J. 37 838 Mathers v. Lynch (1867) 27 U. C. R. 244 838 Mathers v. Royal Bank of Canada (1913) 29 O. L. R. 141; 14 D. L. R. 27 317, 341, 342 Matheson Bros. & Co., Re (1884) 27 Ch. D. 225 695 Matlock, etc., Co., In re, Maynard's Case (1874) L. R. 9 Ch. 60.. 797 Matlock Old Bath Hydropathic Co., Re (1873) 29 L. T. 441 797 Matthew Guy, etc., Co.. Re (1912) 26 0. L. R. 377; 4 D. L. R. 764. 504 Matthew Guy Carriage and Automobile, Re, Thomas's Case (1911-2) 3 0. W. N. 902; 1 D. L. R. 642 109, 304 Matthew Guy Carriage and Automobile Co., Re (1912) 5 D. L. R. 393 852 Matthews v. Great Northern Railway Co. (1859) 28 L. J. Ch. 375 432 Maude, Ex parte [18711 6 Ch. 51 r 835 Maudslay Sons & Field, Re (1900) 1 Ch. 602 365, 366, 416 Maund v. Monmouthshire Canal (1842) 4 M. & G. 452 149 Maynard v: Gamble (1863) 13 C. P. 56 123 Maynard's Limited, In re [18981 1 Ch. 515 793 Mayor of Colchester v. Brooke (1845) 7 Q. B. 385 546 Mayor of Colchester v. Louten (1813) 1 V. & B. 226 515 Maxwell's Case (1874) L. R. 20 Eq. 585 805 McCallam v. Sun, etc., Co., (1902) 1 0. W. R. 226 198 McCann Knox Milling Co., Re (1909-10) 1 O. W. N. 579 769 McCarter v. York County Loan (1901) 14 O. L. R. 420 732, 760 McCarthy, J. & Sons, Re (1916-7) 38 O. L. R. 3; 32 D. L. R. 441 (App. Dlv.) 736, 739, 741, 742. 852, 854, 874, 876 McClure v. Langley (1916) 10 O. W. N. 32 484 McCollin V. Gilpin (1880) 5 Q. B. D. 390 466 McConnell v. Wright (1903) 1 Ch. 546 189 TABLE OF CASES. 11 McC — Mer PAGE McCord's Case ( 1891) 21 0. R. 264 330 McCraken v. Mclntyre (1878) 1 S. C. R. 479 ...158, 161, 332, 797 McCurdy v. Oak Tire, etc., Co. (1919) 44 0. L. R. 571 233, 633, 637 McDiarmid v. Hughes (1888) 16 O. R. 570 110 McDonald and Noxon, Re 1 6 0. R. 368 5 McDonald v. Great Western Ry. Co., 21 U. C. R. 223 378 McDonald v. Upper Canada Mining Co. (1868) 15 Gr. 179 123 McDougall V. Lindsay Paper Mill Co. (1883) 10 P. R. 247 367 McEdwards v. Ogilvie (1887) 4 Man. L. R. 1 131, 367 McEwan v. London and Bombay and Mediterranean Bank (1866), W. N. 407 743 McEwen's Case (1871) L. R. 6 Ch. 582 801 McFarland v. Bank of Montreal (1911) A. C. 96 483 McFarlane v. McDonald (1874) 21 Gr. 319 837 McGee v. Rosetown Electric Co. (1917-8) 11 Sask. R. 68 144 McGill Chair Co., Re (1912) 5 D. L. R. 393 851,^852 McGill Chair Co. (Munro's Case) (1912) 26 0. L. R. 254 109, 161, 234, 303, 304, 305 McGregor v. Currle (1876) 26 U. C. C. P. 55 162 McGregor v. Carrie (1914) 31 O. L. R. 261, affirmed by Privy Council, Dec. 14, 1915 337 McHugh V. Union Bank of Canada (1913) A. C. 299 108 Mcintosh V. Commissioners, etc., of Halifax (1888) 20 N S R 430 124 McKain v. Canadian Birkbeck (1904) 7 0. L. R. 241 ... .324, 327, 367 McKay's Case (1876) 2 Ch. D. 1 .' 802 McKay v. L' Association Coloniale de Construction (1884) 13 R. L. 383 (S. C.) 685 McKay v. City of Toronto (1917) 39 0. L. R. 34; (1918) 43 0. L. R. 263; (1919) 88 L. J. P. C. 204 121, 122, 123 McKewan's Case (1877) 6 Ch. D. 447 799, 805 McKinnon v. Doran (1915) 34 0. L. R. 403; (1915-16) 35 L. R. 349; (1916) .53 S. C. R. 609 384, 385, 386 McKnight v. Van Sickler (1915) 51 S. C. R. 374.128, 137, 139, 140. 141 McLaren v. Fisken (1881) 28 Gr. 352 443, 488 McLean v. Allen (1890) 14 P. R. 84 746 McLean v. Brantford (1858) 16 U. C. R. 347 122, 127 McLean, Stinson & Brodie, Ltd., Re (1910) 2 O. W. N. 294 706 McMillan v. Le Roi (1906) 1 Ch. 331 530 McMurrich v. Bondhpad Harbor (1852) 9 U. C. Q. B. 333 324, 335. 336 McNabb v. Oppenhelmer (1885) 11 P. R. 214 728 McNeil V. Fultz (1907 38 S. C. R. 198 213. 385 McSherry v. Commissioners of the Cobourg Town Trust (1880) 45 U. C. R. 250 551 McWhlrter v. Thorne, ]9 C. P. 302 843, 844 Medical Battery Co.. Re (1894) 1 Ch. 444 704 Mf'ge & Anglers' Case (1875) W. N. 208 793 Melbourne Brewery, In re. 1 Ch. 453 409 Melson, Alfred. Ltd., In re (1900) 1 Cb. 841 717 Memphis & Cbarlcston R. Co. v. Woods, 16 Am. St. 81 524 Menier v. Hooper's Telegraph Works (1874) L. R. 9 Ch. 350.524, 527 Men's Wear, Ltd.. He (1915) 22 D. L. R. 530 752 Mercantile Bank of Australia. Re (1892) 2 Ch. 204 695 Ill TABLE OF CASES. Mei^ Mod PAGE Morcaiiiiie, otc, Co. v. Kivcr Plato Co. (1892) 2 Ch. 303 365, 381 MortMUtile Investment i^i General Trust Co. v. River Plate (1894) 1 Ch. 578 417 Merchant Banking Co. v. The Mercnants Joint Stock Bank (1878) 9 Ch. D. 560 61 Merchants Bank v. Hancock (1883) 6 O. R. 285 367, 369, 483, 485 Merchants Bank v. Roche Coal Co. (1892-3) 3 Terr. L. R. 463... 746 Merchants Bank of Halifax v. Gillespie (1885) 10 S. C. R. 312 . . 696 Merchants Life, Re (1901) 1 D. L. R. 256 886 Merchants Life Assn. of Toronto, In re, Hoover's Claim (1902) 22 Occ. N. 21 821 Meriden Britannia Co., The v. Braden (1894) 21 A. R. 352 839 Merritt v. Copper Crown (1903-4) 36 N. S. R. 383 534, 557 Mersey Dock Trustees v. Gibb (1865) L. R. 1 H. L. 93 149 Mersey Steel and Iron Co. v. Naylor (1884) 9 App. Cas. 434 733 Mersey Steel and Iron So. v. Naylor (1882) 9 Q. B. D. 648 768 Metal Constituents, Limited, In re (1902) 1 Cb. 707 204, 225 Metropolitan Bank v. Vivian (1900) 2 Ch. 654 393 Metropolitan Coal Consumers' Association v. Scrimgeour (1895) 2 Q. B. 604 155 Metropolitan Fire Insurance Co., Wallace's Case (1900) 2 Ch. 671 236 Metropolitan Mortgage & Savings Co., Re (1915) 7 W. W. R. 1204 398 Metropolitan Railway Warehousing Co. (1867) 15 W. R. 1121 ... 720 Metropolitan Theatres, Ltd., Re (1919) 16 O. W. N. 241 429 Meyers v. Cain (1905) 6 O. W. R. 834 472, 480 Meyers v. Lucknow, etc., Co. (1905) 6 O. W. R. 291 269, 334 Mexican Santa Barbara Mining Co., Ex p. (1890) 34 Sol. J. 269. . 714 Michie v. Erie & Huron Ry. Co. (1876) 26 U. C. C. P. 566 437, 438 Michigan Central Ry. Co. v. Wealleans (1894) 24 S. C. R. 309 105 Michigan Trust Co. v. Canadian Puget Sound Lumber Co. (1918) 3 W. W. R. 273 877 Middleton v. Scott (1902) 4 0. L. R. 459 402 Midland Express, In re (1914) 1 Ch. 41 404 Migotti's Case (1867) L. R. 4 Eq. 238 224 Milan Tramways Co., In re. Ex parte Theys (1882) 22 Ch. D. 122. 818 Milburn v. Wilson (1901) 31 S. C. R. 481 217 Miles V. Bough (1842) 3 Q. B. 845 287, 288 Miller's Dale, etc., Co., Re (1886) 31 Ch. D. 211 788, 789 Mills V. Northern Railway of Buenos Ayres Co. (1870) 5 Ch. 621. 419 Miln V. Arizona Copper (1899) 36 Sc. L. R. 741 258 Milot V. Perrault, C. R. (1886) 12 Que. L. R. 193 454, 457 Milward v. Thatcher (1787) 2 T. R. 81 449 Miniico Sewer Pipe Co., Re (1895) 26 O. R. 289 474, 819 Minister of Railways and Canals v. Quebec Southern (1908-9) 12 Can. Ex. Ct. Rep. 153 440 .Miquelon v. Vilandre (1914) 16 D. L. R. 316 814, 816 Mitchell's Case (1870) L. R. 5 Ch. 400 801 Mitchell's Case, Alex. (1879) 4 App. Cas. 548 323 Mitchell's Case, Nelson (1879) 4 App. Cas. 624 32S Modern Bedstead v. Tobin (1908) 12 O. W. R. 22 223, 225 Modern House, etc, Co., Re Goudy's Case (1913) 28 0. L. R. 237; (1913) 29 0. L. R. 266 156 TABLE OF CASES. Hii Mod— Mor PAGE Modstock Co. V. Harris (1884-1907) 40 N. S. R. 330 447, 460 Moliuer v. La Cie de Pulpe (1887) 3 M. L. R. (S. C.) 273 737 Molsons Bank v. Halter, 18 S. C. R. 88 841 Mo'.sons Bank v. Stcddart, S. C. (1890) M. L. R. 6 S. C. 17 170 Monarch Bank. Re (unreported. May 29, 1908) 697 Monarch Bank, Re (1910) 18 0. W. R. 743, 2 O. W. N. 738 855 Monarch Bank. Re (1910) 22 O. L. R. 516 ... .440, 495, 867, 869, 870 Monarch Bank, Re (1914) 32 O. L. R. 207 5, 67, 440, 684, 780, 782, 784, 786, 804, 835, 852 Monarch Bank of Canada, Murphy's Case, June 17th, 1919 (unreported, Brodeur, J.) 856 Monarch Bank. Re. Murphy's Case (1918-19) 45 O. L. R. 412, affirmed sub nom.; Murphy v. Clarkson, 1920, 17 O. W. N. 295 240, 246 Monarch Ins. Co., In re, Gorrissen's Case (1873) L. R. 8 Ch. 507. . 734 Monarch Life v. Brophy (1907) 14 O. L. R. 1 . .246, 247, 439, 440. 486 Monarch Life, etc., Co. v. Mackenzie (1911) 15 D. L. R. 695 158 Monolithic Bldg. Co., In re (1915) 84 L. J. Ch. 441; 1915 1 Ch. 643 398 Mont de Piet6 of England (1892) W. N. 166 725 Montagu's Case (1888) W. N. 137 787 Montgomery v. Mitchell (1907) 18 Man. L. R. 37 324, 327 Montgomery v. Mitchell (1908) 7 W. L. R. 518 324, 367 Montgomery v. Wrights, Ltd. (1916-17) 38 0. L. R. 335 320 Montgomery Ship Collision Doors Syndicate (1903) 72 L. J. Ch. 624 714 Montreal City Bank v. Corporation of Perth, 32 U. C. C. P. 18 ... 378 Montreal City Club, Re (1895) 8 R. J. Q. (S. C.) 527 682, 697 Montreal Cold Storage and Freezing Co., Ltd. (1901-2) 4 Que. P. R. 294 833 Montreal Cold Storage, etc., Co., Mullin's Claim (1901-2) 4 Q. P R. 340 Montreal Lithographing Co. v. Sabislon (1899) A. C. 610 61 Montreal Mining Co. v. Cuthbertson (1852) 9 U. C. Q. B. 78 293 Montreal Public Service Corporation v. Champagne (1917) 33 D. L. R. 49 143, 485. 487 Montreal and St. Lawrence, etc., Co. v. Robert (1906) A. C. 196. 368, 489. 531 Montreal Street Railway Co. v. Ritchie, 16 S. C. R. 622 551 Montreal Telegraph Co. v. Law (1883) 27 L. C. Jurist 257 • 105 Moody V. Canadian Bank of Commerce (1891) 14 P. R. 258 817 Moor V. Anglo-Italian Bank (1878-9) 10 Ch. D. 681 714, 824 Moore. Sir John, Gold Mining Co. (1879) 12 Ch. D. 325 756 Moore Bros. Co.. In re (1899) 1 Ch. 627 225 Moore v. Kirkland (1856) 5 C. P. 452 547 Moore v. McLaren (1862) 11 C. P. 534 286, 323, 324 Moore v. North Western Bank (1891) 2 Ch. 599 320 Moore V. Ontario Ins. Association (1888) 16 O. R. 269... 149, 216. 548 Moore and the Port Bruce Harbour Co.. Re (1857) 14 U. C. R. 365 458 Morden Woollen Mills v. Haeckels (1908) 17 Man. R. 557 241. 284 292. 437. 445. 447. 453. 456 Morgan v. Brundrett, 5 B. & Ad. 296 843 21 li\' TABLE OF CASES. Mor -Nat PAGE Moriu c<: Bilodeau (1898) Q. R. 8 Q. B. 330 772, 773 Morlock & Cline (1911) 23 O. L. R. 165 814, 815 Morison v. Thompson (1874) L. R. 9 Q. B. 480 476 Morris v. Union Bank (1901) 31 S. C. R. 594 156, 784 Morrisbnrgh & Ottawa v. O'Connor (1913) 34 0. L. R. 161 200, 230, 241, 637 iMorrison v. Chicago & N. W. Granaries (1898) 1 Ch. 263 405 Morrison v. Trustees, etc. (1899) 68 L. J. Ch. 11 296, 297 Morrison v. Water (1892) 19 A. R. 6^22 774 Morrison. Jones & Taylor. In re (1914) 1 Ch. 50 392 Morrow v. Peterborough Water Co. (1901) 4 0. L. R. 324 259, 835 Morton v. Cowan (1894) 25 O. R. 529 320, 335 Moseley v. Koffyfontein (1904) 2 Ch. 108 158, 379 Moss Steamship Co. v. Whinney (1912) A. C. 254 414, 415 Mother Lode Consolidated v. Hill (1903) 19 T. L. R. 341 280, 307 Mott V. Bank of Nova Scotia (1887) 14 S. C. R. 650 698 Mowat V. Dominion Trust Co. (1914-15) 8 Sask. L. R. 404 871, 872 Mo watt V. Castle Steel Co. (1886) 34 Ch. D. 58 378 Mozley v. Alston (1847) 1 Ph. 790 524 Muir V. Glasgow Bank (1879) 4 App. Cas. 337 167 Muirhead, In re (1916) 2 Ch. 181; 85 L. J. Ch. 598 434 Muldowan v. German-Canadian Land Co. (1909) 19 Man. L. R. 667 '....66, 141, 441, 512 Munro v. Commercial B .Soc, 36 U. C. R. 464 809 Munt V. Shrewsbury ,etc., Ry. (1850) 13 Beav. 1 37, 525 Murdock v. Manitoba, etc., R. Co. (1881) Temp. Wood (Man.) 334 128 Murphy v. Clarkson (1920) 17 0. W. N. 295 240. 246 Murray v. Bush (1872) L. R. 6 H. L. 37 471 Musgrave & Hart's Case (1868) L. R. 5 Eq. 193 783 Mutoscope, etc., Co., In re (1899) 1 Ch. 896 805 Mutual Society, In re (1881) 18 Ch. D. 530 .783 N. Nagle V. Kilts. Tay. R. 269 228 Nagrella Co., Ltd., Re (1915) 8 0. W. N. 452 238 Nant-Y-Glo & Blaina &c. Co. v. Grove (1878) 12 Ch. D. 738 386 Nash Brick and Pottery Mfg. Co., In re (1873) 3 N. S. R. 254 . . 107 Nasmith's Case (1891) 18 A. R. 209 788 Nasmith v. Manning (1886) 5 A. R. 126; 5 S. C. R. 417 787 Nasmith v. Manning (1880) 5 S. C. R. 417 239, 240, 243 Nassau Phosphates Co., 2 Ch. D. 610 12 Nassau Steam Press v. Tyler (1894) 70 L. -T. 376 151 Natal Investment Co. (1869) 20 L. T. 962 786 Natal Land, etc., Co. v. Pauline Colliery Syndicate (1904) A. C. 120 120 Nation's Case (1866) L. R. 3 Eq. 77 782 National v. Egleson (1881) 29 Gr. 406 227, 233, 285, 789 National Arms and Ammunition Co., In re (1885) 28 Ch. D. 474. 812, 813 National Automobile (1914) 7 O. W. N. 22 714 National Bank. Re (1870) L. R. 10 Eq. 298 802 TABLE OF CASES. Iv Nat— New page National Bank of Australasia v. Morris [1892] A. C. 287 843 National Bank of Wales, Limited, Re (1899) 2 Ch. 629 422, 424, 492, 495, 496, 870 National Credit and Exchange Co. (1862) 11 W. R. 161 692 National Debenture Corporation, Re (1891) W. N. 83 697 National Debenture and Assets Corporation, Re (1891) 2 Cb. 505. 13, 545 National Dwellings Society v. Sykes (1894) 3 Cb. 159 526 National, etc., Co., Ltd. (1902) 2 Cb. D. 34 715, 719, 870 National Financial Co., Re (1867) 15 W. R. 499 864 National Financial Co., Ex p. Oriental Commercial Bank (1868) L. R. 3 Cb. 791 167 National Funds Co.. 3 Cb. 791 810 National Funds Assurance Co., Re (1878) 10 C. D. 118 497, 731 National Husker Co., Re, Wortbington's Case (1913) 10 D. L. R. 643; 4 0. W. N. 1077; (1914) 14 D. L. R. 696 199 National Insurance Co. v. Hatton (1879) 2 L. N. 238; 24 L. C. J. Q. B. 26 278 National Land v. Rat Portage Lumber Co. (1917) 36 D. L. R. 97. 484 National Malleable, etc., Co. v. Smitb's Falls (1907) 14 O. L. R. 22 113, 136, 141, 143, 483 National Motor Mail Coacb Co., In re (1908) 2 Cb. 515 120 National Motor Mail Coach, In re (No. 2) (1908) 2 Cb. 228 643 National Permanent Benefit Building Society, Re, Ex p. William- son (1869) L. R. 5 Ch. 312 685 National Provincial Bank of England v. United Electric Theatres (1916) 85 L. J. Cb. 106 391, 416 National Provincial Life Ass'n. Co. (1870) L. R. 9 Eq. 306 710 National Provincial Co., Re, Gilbert's Case (1870) L. R. 5 Ch... 559 471 National Savings Bank Association, In re (1866) L. R. 1 Ch. App. 547 780, 805 National Tolepbone Co., Ltd., Re (1914) 1 Ch. 755 258 National Trust v. Frank (1917) 3 W. W. R. 43 156, 159 National Trust v. Trusts and Guarantee (1912) 26 0. L. R. 279. . 390. 395, 396, 397, 757, 760, 761 National Trust v. Whlcber (1912) A. C. 377 405 Neelon v. Town of Thorold (1893) 22 S. C. R. 390.. 144, 158, 162, 370 Neelon v. Town of Thorold (1891) 20 O. R. 86; (1893) 22 S. C. R. 390 479 Nell V. Atlanta Co. (1894) 11 T. L. R. 407 502 Nelles V. Ontario Investment Association (1889) 17 O. R. 129.. 200, 216, 548, 593, 790 Nelles v. Windsor, Essex and Lake Shore, etc., Ry. (1908) 16 O. L. R. 359 340 Nellis v. Second Mutual, etc.. Co. (1881) 29 Gr. 399 300 Nelson's Case (1874) W. N. 190 783 Nelson v. Faber (1903) 2 K. B. 376 394. 395 Nelson Coke and Gas Co. v, Pellatt (1902) 4 O. L. R. 481 4, 225, 228, 242, 243 Nelson Ford Lumbor Co.. Re (1908) 8 W. L. R. 79 695 Neucbate] Asphalt Co.. Ex p. (188?.) W. N. 17 712 New Balkis Eesterling v. Randt (1904) A. C. 65 296 l\i TABLE OF CASES. New- Nor PAGE New Hninswick. tMc. Ry. Oo. v. Conybeare (1802) 9 H. L. C. 711. 194 New Cliinese Antimony Co., In re (1916) 85 L. J. Ch. 429 259 New City Constitutional Club Co. (1887) 34 Ch. D. 646 748 New Druce-Portland Co., Ltd. v. Blakiston (1908) 24 Times L. R. 583 G45 New Durham Salt Co. (1890) 7 T. L. R. 13 381 New Eberhardt Co. (1889) 43 Ch. D. 118 793 New Haven Local Board v. Newhaven School Board (1885) 30 Ch. D. 350 455 New Loudon and Brazilian Bank v. Brocklebank (1882) 21 Ch. D. 302 263 N«w Mashcnaland Exploration Co., In re (1892) 3 Ch. 577 ..494, 866 New Oriental Bank, In re [1895] 1 Ch. 753 812 Newport Co. (1880) 42 L. T. 785; (1880) W. N. 80 796 Newton v. Ontario Bank, 13 Gr. 652 836, 842, 843 Newton v. Ontario Bank (1869) 15 Gr. 283 837 New Transvaal Co., Re (1896) 2 Ch. 750 8 New Westminster Gas Co., Re (1895-7) 5 B. C. R. 618 752 New York Exchange Co., In re (1893) 1 Ch. 371 724 New York Taxicab Co., In re (1913) 1 Ch. 1 409, 413 New Z-ealand Banking Corporation, Ex p. Hankey (1869) 21 L. T. 481 772 New Zealand Kapanga Co., Re (1874) L. R. 18 Eq. 17 (n) 795 New Zealand Land Company, Re, Jackson's Case (1888) N. Z. L. R. S. C. 549 101 New Zealand, etc., Co. v. Peacock (1894) 1 Q. B. 622 37, 104, 278, 280, 289 Newhouse v. Northern Light, Power, etc., Co. (1914) 29 W. L. R. 249 90 Newitt, Ex p. (1884) 14 Q. B. D. 177 756 Newman & Co., Re (1895) 1 Ch. 674 49, 459 Newry & Inniskillen Ry. v. Edmunds (1848) 2 Ex. 118 287 Newspaper Proprietary Syndicate, In re (1900) 2 Ch. 349 814 Nicholas, Ex p. (1852) 2 D. M. & G. 271 801 Nicholson v. Bradfield Union (1866) L. R. 1 Q. B. 620 125 Nicol's Case (1885) 29 Ch. D. 421 150, 229, 761 Nicol's Cas« (1858) 3 DeG. & J. 387 790 Nicoll V. Greaves, 33 L. J. C. P. 259 508 Niger Merchants Co. v. Capper (1877) 18 Ch. D. 557 709, 712 Nipissing Planing Mills, Re, Rankin's Case (1909) 18 O. L. R. 80 224, 241, 785 Nitedals Taendstikfabrik v. Bruster (1906) 2 Ch. 671 503 Nixon v. Green (1856) 11 Ex. 550 161 Normandy v. Ind, Coope & Co. (1908) 1 Ch. 84 476 Norquay v. G. T. P. Town and Development Co. (1916) 25 D. L. R. 59 '. 113 North American Land, etc., Ck)., v. Watkins (1904) 1 Ch. 242; (1904) 2 Ch. 233 870 North Bay Supply Co., Re (1905) 6 0. W. R. 85 156 North Brazilian Sugar Factories, Re (1888) 37 Ch. D. 83 864 North Cheshire v. Manchester (1899) A. C. 83 61, 62 North Simcoe Ry. Co. and Toronto, Re (1875) 36 U. C. Q. B. 101. 437, 438 TABLE OF CASES. Ivii Nop^ — Ola PAGE North Sydney, etc., Coal Co. v. Greener (1898) 31 N. S. R. 41.439, 442 North Sydney Investment Co. v. Higgins (1899) A. C. 263 ..119, 796 North Yorkshire Iron Co., In re (1878) 7 Ch. D. 661 749 North-Eastern Insurance Co., In re (1919) 88 L. J. Ch. 121 .. 478 Northampton v. Midland Co. (1878) 7 Ch. D. 500 689 Northern Assam Tea Co., Re (1870) L. R. 5 Ch. 644 751, 752 Northern Assurance Co.. Re (Black's Case) (1915) 25 D. L. R. 703 ; 25 Man. R. 670 789 Northern Assurance Co. v. Farnham (1912) 2 Ch. 125 417 Northern Construction, Ltd., Re (1910) 19 Man. L. R. 528 431 Northern Counties of England Fire Ins. Co., In re, Macfarlane's Claim (1880) 17 Ch. D. 337 734, 811 Northern Electric Co., Re (1890) 63 L. T. 369 786 Northern Navigation Co. v. Long (1906) 11 O. L. R. 230 431 Northern Trust v. Butchart (1917) 35 D. L. R. 169 430, 492, 493, 494, 495, 865, 867, 870 Northfield Iron and Steel Co., Re (1866) W. W. 253 802 Northumberland Ave. Hotel Co., Re (1886) 33 Ch. D. 16 120, 214 Northumberland & Durham Banking Co., Re (1858) 2 D. & J. 508. 752 North-West Battery v. Hargreaves (1913) 23 Man. L. R. 923; 15 D. L. R. 193 199, 232, 239, 242, 243, 489 North-West Cattle Co., In re (1907) Que. 5 P. R. 30 699 North-West Electric Co. v. Walsh (1898) 29 S. C. R. 33 109, 159, 292, 474, 492, 798 North-West Transportation Co. v. Beatty (1887) 12 App. Cas. 589 144, 475, 476, 477, 525, 527, 528 Norton's Case (1881) 50 L. J. Ch. 454 794 Norton v. Florence Land and Public Works Co. (1877) 7 Ch. D. 332 365 Norwalk Mining Co., Re (1915-16) 9 O. W. N. 41 479 Norwich v. Attorney-General (1865) 2 E. & A. 541 438 Norwich Equitable, €tc., Co., In re (1884) 27 Ch. D. 515 862 Norwich Equitable Fire Insurance Society, Re (1886) 34 W. R. 206 360 Nottingham Brewery Co., In re (1888) 4 T. L. R. 429 795 Novell v. Canada Southern Ry. (1883-4) 9 A. R. 310 56 Nowlan v. Ablett (1835) 2 C. M. & R. 54 508 Nutter Brewing Co., Re (1909) 1 0. W. N. 400 233 0. Oak Pits Colliery Co., Re (1882) 21 Ch. D. 322 749 Oakbank Oil Co. v. Crum (1883) 8 App. Cas. 65 221, 420 Oakf's & Pef'k, Ex p. .( 1 867 ) L. R. 3 Eq. 576 783 Oakes v. Turquand (1867) L. R. 2 H. L. 325 12, 545, 607. 733, 785, 788, 789. 790 Oarby, Re, Ex parte Brougham (1911 ) 1 K. B. 95 206 O'Brien v. Weaver (1880) 3 L. N. 1 11 338 Ocfan Falls Co.. Re (1913) 13 D. L. R. 265 716, 719 O'Dell V. Boston and Nova Scotia, etc., Co. (1897) 29 N. S. R. 385 133. 438. 487 Odessa Tramways v. Mendel (1878) 8 Ch. D. 235 277, 283 Okoll V. Morris, etc.. Co. (1902) 9 B. C. R. 153 716 Olatbe Silver Mining Co.. Re (1884) 27 Ch. D. 278 713, 714 Iviii TABLE 01'^ CASES. Ols— O'Su PAGE Olt^oii V. Machiu (lit 1:2) 8 U. L. 11. ISS; 4 O. W. N. 287 510 Olymina. Re (1915) 32 W. L. R. 539, 628, affirmed (1915) 25 D.L. R. 620 724 Olympia Co., Re (19150 25 D. L. R. 620 483. 718 Ogilvie. lu re (1919) 88 L. J. Ch. 159 433 Omnium Electric Palaces. Limited v. Baines (1914) 1 Ch. 332.. 208, 210 O'Neill V. London Jockey Club (1915) 8 O. W. N. 602 90, 91 Ontario Bank, Re (1910) 21 O. L. R. 30, affirmed sub nom. Mc- Farland v. Bank of Montreal (1911) A. C. 96 483 Ontario Bank, Re (1917) 12 0. W. N. 245 854 Ontario Bank, Re (1916-7) 38 0. L. R. 242 821, 874 Ontario Bank. Re, Massey & Lees' Case (1913) 8 D. L. R. 243; 27 0. L. R. 192 735, 763, 773, 781, 800 Ontario Bank v. Chaplin (1889-92) 20' S. C. R. 152 811, 825, 857 Ontario Co-operative Stonecutters' Association v. Clark (1880) 31 C. P. 280 130 Ontario Express and Transportation Co., In re (1893) 24 0. R. 216; (1894) 21 A. R. 646 250, 269, 306 Ontario Express Co., Re (1894) 21 A. R. 646; 24 S. C. R. 716. .788, 856 Ontario Express, Re (1898) 25 A. R. 587 503 Ontario Express Co., Dawson Bros.' Case, 3rd July, 1893, unre- ported decision M.O. (Ont. ) ^ 820 Ontario Fire Insurance Co., Re (1915) 23 D. L. R. 758 506 Ontario Fire Insurance Co., Re, Heighington's Case, 10 0. W. R. 911 819 Ontario Forge and Bolt Co., Re (1894), 26 0. R. 407 694, 698 Ontario Forge and Bolt Co., Re (1896) 27 O. R. 230 814, 816 Ontario Forge and Bolt Co. v. Comet Cycle Co. (1896) 17 P. R. 156 764 Ontario Investment Association v. Sippi (1890) 20 0. R. 440 .. 276 Ontario Investment Co. v. Leys (1893) 23 0. R. 496 ... .169, 332, 799 Ontario Ladies' College v. Kendry (1905) 10 O. L. R. 324. ...202, 248 Ontario Marine Insurance Co. v. Ireland (1855) 5 U. C. C. P. 135. 298 Ontario & Western Lumber Co 78, 80 Ontario Western Lumber Co. v. Citizens' Telephone Co. (1896) 32 C. L. J. 237 129, 143 Onward Building Society, In re (1891) 2 Q. B. D. 463 735 Ooregum v. Roper (1892) A. C. 125 119, 157, 789, 793, 796 Oregon Mining Co., The, Re (1885) 29 Sol. J. 204 714 Opera Limited, In re (1891) 2 Ch. 154 758 Opera, Lim., Re (1891) 3 Ch. 260 393 Oriental Bank Corporation, In re, MacDowall's Case (1886) 32 Ch. D. 366 733 Oriental Hotels Co., Re (1871) L. R. 12 Eq. 126 724, 768 Ormerod's Case (1894) 2 Ch. 474 790 Ormerod, Grierson & Co., Re (1890) W. N. 217 776 Oro Fino Mines, The, Re (1898-1907) 7 B. C. R. 388 712, 719, 856 Osborne v. Preston & Berlin Ry. Co., 9 U. C. C. P. 241 378 Oshawa Heat, Light and Power Co., Re (1906) 8 0. W. R. 414.. 831 Osier & Toronto Grey & Bruce Ry., Re (1881) 8 P. R. 506 384 O'Sullivan v. Donovan (1906) 7 O. W. R. 78; (1906) 8 0. W. R. 320 156, 236 TABLE OF CASES. llx Ott— Par PAGE Ottawa Cement Block Co., Re., Macoun's Case (1907) 14 0. L. R. 389 155, 166, 796 Otawa Dairy Co. v. Sorley (1906) 34 S. C. R. 508 226, 247 Ottawa Porcelain Co., Re (1900) 31 0. R. 679 . .133, 738, 745, 812, 826 Otto Electric Manufacturing Co., (1905) Limited, In re (1906, 2 Ch. 390 645 Ottos Kopje Diamond Mines, Re (1893) 1 Cli. 618 • 335 Outlook Hotel Co., In re (1909) 2 Sask. L. R. 435 698, 703, 707 Overend, Gurney & Co. (1867) 16 L. T. 148 850 Owen V. Cronk (1895) 1 Q. B. 265 414 Owen V. Whittaker, 20 N. J. Eq. 122 460 Owen Sound Building and Savings Society v. Meir (1893) 24 O. R. 109 : 520, 549 Owen Sound Dry Dock, Re (1891) 21 0. R. 349 788, 798 Owen Sound Lumber Co., Re (1917) 33 D. L. R. 487; 38 O. L. R. 414 157, 428, 429, 430, 478, 543 Owen Sound Lumber Company, Re (1915) 34 O. L. R. 528; (1916-17) 38 O. L. R. 414 461, 492, 495, 865, 866, 867, 868, 869, 870 Owen Sound Lumber Co., Re (1918 ) 14 0. W. N. 306 776 Oxford Benefit Building and Investment Society, In re, 35 Ch. D. 502 " 424, 429 Oxford Corporation v. Crow (1893) 3 Ch. 535 122 Pacaud v. Fournier (1883) 16 Q. L. R. 54 735 Pacific Coast Coal Mines v. Arbuthnot (1916) 31 D. L. R. 378 .. 363 Pacific Coast Mines v. Arbuthnot (1917) 30 D. L. R. 564; (1917) A. C. 607 514, 517 Pacific Coast Syndicate (1913) 2 Ch. 263 834 Pacaya Rubber & Produce Co., Re (1914) 1 Ch. 542 198 Padstow Association, Re (1882) 20 Ch. D. 137 697, 711, 850 Pagin & Gill's Case (1877) 6 Ch. D. 681 796 Pakenham Pork Packing Co., Re (1903) 6 0. L. R. 582 201, 741 Page v. Austin (1882) 7 A. R. 1; (1882) 10 S. C. R. 132 . . 170, 269, 332, 797, 881 Pakenham Pork Packing Co.. Galloway's Case (1906) 12 O. L. R. 100 233, 234. 250, 254, 485 Palmer's Decoration and Furnishing Co. (1904) 2 Ch. 743 384 Panama, etc., Co. (1870) L. R. 5 Ch. 18 392. 394 Panther Lead Co., In re (1896) 1 Ch. 978 810, 811 Parbury's Case (1861) 3 D. F. & J. 80 801 Parbury's Case (1895) W. N. 142 798 Paris Skating Rink Co., Re f 1877) 5 Ch. D. 959 711 Parish of St. Cosalre v. McFarlane (1887) 14 S. C. R. 738 382 Park v. Lawton (1911) 1 K. B. 588 556, 658 Park V. Royalties Syndicate (1912) 1 K. R. 330 184 Parker v. McKenna (1874) L. R. 10 Ch. 118 476 Parker v. McQuesten, 32 U. C. R. 273 497 Parkes v. St. George (1883) 2 O. R. 342 761 Parkin Elevator Co.. Ltd.. Re, Dunsmoor's Claim (191G) 37 O. L. R. 277 508, 814, 815 Ix TABLE OF CASES. Par — Per PAGE Paruaby v. Lancaster Canal (1839) 11 A. & E. 223 149 Parsons v. Sovereign Bank (1913) A. C. 160 414. 415 Parsons v. Surgey (1864) 4 F. & F. 247 519 Part's Case (1870) L. R. 10 Eq. 622 783 Patent Cocoa Fibre Co. (1876) 1 Ch. D. 617 704, 723 Patent File Co., In re (1871) L. R. 6 Ch. 83 371, 481 Patent Paper, etc., Co., Re, Addison's Case (1870) L. R. 5 Cli. 294 303 Patent Wood Keg Syndicate v. Pearse (1906) W. N. 164 514 Patterson v. Brown (1905) 6 O. W. R. 204 213 Patterson v. Turner (1902) 3 0. L. R. 373 224. 225 Paul V. Kobold (1905) 2 W. L. R. 90; (1906) 3 W. L. R. 407.... 288, 299, 447, 490 Paul V. Piccadilly Hotel, Ltd. (1911) 2 Ch. 534 401 Payne v. Hendry (1873) 20 Gr. 142 837 Payne v. Mayor of Brecon (1858) 3 H. & N. 572 376 Pearson's Case (1877) 5 Ch. D. 336; 4 Ch. D. 222 802 Pearson v. Wheeler (1874) 55 N. H. 41 460 Peat V. Clayton (1906) 1 Ch. 659 318 Peckham Tram Co., Re (1888) 57 L. J. Ch. 462 722 Peek V. Derry (1887) 37 Ch. D. 541 .181, 192, 194 Peek V. Gurney (1873) L. R. 6 H. L. 403 194 Peek V. Transmarin Iron Co. (1876) 2 Ch. D. 115 417 Peel's Case, L. R. 2 Ch. 674 12 Peel V. London & N. W. Ry. (1907) 1 Ch. 5 529 Pegge V. Neath District Tramways Co. (1898) 1 Ch. 183 381 Pell's Case (1870) L. R. 5 Ch. 11 41, 42, 156, 793, 797 Pellatt's Case (1867) L. R. 2 Ch. 527 41, 157, 239, 786, 788, 789 Pelly, Ex parte (1882) 21 Ch. D. 492 817, 870 Peloe V. Welland Ry. Co. (1862) 9 Gr. 455 365 Penang Foundry Co. v. Gardiner (1913) S. C. 1203 Ct. of Sess... 158 Pengelly-Akitt, Ltd., Re, Jacques Case (1914) 16 D. L. R. 79. 104, 373 Pender v. Lushington (1877) 6 Ch. D. 70 .' 527, 528 Penfold, Ex p. (1871) 4 D. G. & Sm. 282 825 Peninsular Co. v. Fleming (1871) 27 L. T. 93 799 Penn v. Lord Baltimore (1850) 1 Ves. Sr. 444 365 Pen-y-Van Colliery Co. (1877) 6 Ch. D. 477 711 Penobscott, etc., Ry. Co. v. Dunn (1885) 39 Me. 587 460 Penrose v. Martyr (1858) E. B. E. 499 151 Pentelow's Case (1869) L. R. 4 Ch. 178 226, 789 People V. Albany Ry. Co. 55 Bank (N. Y.) 344 459 People V. Chicago Gas Co., 130 111. 268 8 People V. Runkle (1812) 9 Johns (N. Y.) 147 444 People's Loan, Re (1906) 7 0. W. R. 253 714 People's Trust Co., Re (1918) 25 B. C. R. 138 763, 834 People's Loan and Deposit v. Grant (1890) 18 S. C. R. 262 402 Percival v. Wright (1902) 2 Ch. 421 467, 468 Perkins, Re (1890) 24 Q. B. D. 613 263, 325 Perkin's Beach Lead Mining Co. (1877) 7 Ch. D. 371 746 Perrett's Case (1873) 15 Eq. 250 249 Perrin Plow Company, Re, Allan's Case (1908) 11 O. W. R. 186; (1908) 12 O. W. R. 387 171 TABLE OF CASES. Ixi Per— Por P^ge Perrins, Ltd. v. Algoma Tube Works (1904) 8 O. L. R. 634 442 Perry v. McCraken (1876) 7 P. R. 32 161 Perry v. Oriental Hotels Co. (1870) L. R. 5 Ch. 420 746 Perry v. Ottawa (1864) 23 U. C. R. 391 124 Perth Electric Tramways (1906) 2 Ch. 216 378 Perth Flax and Cordage Co., Re (1909) 13 O. W. R. 1140 ..108, 364 Peruvian Railways Co., Re (1867) L. R. 2 Ch. 617 148 Peterborough v. Grand Trunk (1859) 18 U. C. Q. B. 220 438 Peterborough Cold Storage Co. (1907) 14 0. L. R. 475 278, 293, 322, 323, 506, 869 Petrie v. Guelph Lumber Co. (1885) 11 S. C. R. 450. .193, 194, 195, 199 Picard v. Revelstoke (1913) 9 D. L. R. 580; 12 D. L. R. 685 143 Pickering, Ex p. (1869) L. R. 4 Ch. 58 801 Pickering v. Ilfracombe Ry. (1868) L. R. 3 C. P. 235 483 Pierce v. Jersey Waterworks, L. R. 5 Ex. 209 66 Plercy, In re (1907) 1 Ch. 289 433 Piercy v. S. Mills & Co., Lim. (1919) 88 L. J. Ch. 509 234 Pierson v. Crystal Ice Co. (1916) 29 D. L. R. 569; (1917) 2 W. W. R. 1175, 1253 232 Pilken & Co., James, In re (1916) 85 L. J. Ch. 318 158. 235 Pilote V. Leclerc (1917) Que. 52 S. C. R. 127 507, 511, 512, 747 Pirn V. Municipal Council of Ontario (1860) 9 C. P. 304 124 Pineau v. St. Laurent (1916) 25 Que. K. B. 210 237 Pinto Silver Mining Co., Re (1878) 8 Ch. D. 273 697 Pioneer Tractor Co. v. Peebles (1914) 15 D. L. R. 275; 18 D. L. R. 477 199' 200 Pittard v. Oliver (1891) 39 W. R. 311 520 PlanUtions Trust, Ltd. v. Bila Rubber Lands, Ltd. (1916) 114 L. T. 676 452 Plante v. Dalmas Pulp Co. (1914) 20 D. L. R. 983 737, 740 Plender v. Fitzgerald (1888) 5 M. L. R. (Q. B.) 446 779 Plenderleith v. Parsons (1907) 14 O. L. R. 619 402 Plimpton V. Bigelow (1883) 93 N. Y. 592 10 Plisson v. Duncan (1905) 36 S. C. R. 647 415 Plummer v. Sullivan Machinery (1917) 2 W. W. R. 229. 24 B. C. R. 104 "^39 Plummer v. Superior, etc., Co. (1885) 10 P. R. 527 740 Plymouth Patent Sugar Co., Re (1870) N. W. 84 756 Poison Iron Works, Re (1912) 3 0. W. N. 1269, 4 D. L. R. 193. . 311,313,324. 340 Portbriand Cie. v. Cosky (1912-13) 14 Que. P. R. 19 705, 850 Pool's Case (1887) 35 Ch. D. 579 "^94 Poole v. Middleton (1861) 29 Beav. 646 322 Poole v. National Bank of China (1907) A. C. 229 271 Poole. Jackson & Whyte's Case (1878) 9 Ch. D. 322 291, 467 Popple v. Sylvester (1883) 22 Ch. D. 98 403 Portal v. Emmens (187G) 1 C. P. D. 201 "^5 Port Dover and I>ake Huron Ry. Co. v. Grey (1875) 36 U. C. R. 425 286 Port Arthur Wagon Co.. Re, Price's Case; (1915) 8 O. W. N. 480; (1915-16) 9 O. W. N. 358 229, 231 Port Arthur Wagon Co., Sheldon's Case (1919) 45 O. L. R. 260.. 293 Ixii TABLE OF CASES. Por Pub r^f-E Port Arthur Wagon Co., Smyth's Case, (1915-16) 9 0. W. N. 383; (1917) 12 0. W. N. 59; (1919) 57 S. C. R. 388 ....224. 231, 238. 250, 256 Port Arthur w'agou Co., Re, Tudhope's Case (1919) 45 0. L. R. 260 - 248, 276, 279, 323 Portland and Lancaster Steel Ferry Co. v. Pratt (1850) 7 N. B. 2 Allen 17 280 Portuguese Consolidated Copper Mines, Re (1889) 42 Ch. D. IGO. 487, 488, 788 Portuguese Copper Co. (1890) 45 Ch. D. 16 789 Positive Government Ins. Co.. Re (1877) W. N. 23 712 Postage Stamp, €tc.. Co. (1892) 3 Ch. 566 497 Postlethwaite v. Port Philip Company, 43 Ch. D. 452 593 Pound, Son & Hutchins (1889) 42 Ch. D. 402 411, 733 Powell & Sons, In re (1896) 1 Ch. 681 871 Powell-Rees, Ltd. v. Anglo-Canadian Mortgage Corporation (1912) 26 0. L. R. 490; 5 D. L. R. 818 9, 94, 103 Powis V. Quebec Bank (1893) 2 Q. R. (Q. B.) 566 769 Pratt V. The Consolidated Electric Co. (1894) 34 N. B. 23 592 Prefontaine v. Grenier (1907) A. C. 101 493 Premier Industrial Bank v. Carlton Mfg. Co. (1909) 1 K. B. 106. 138 Preservation Syndicate, Re (1895) 2 Ch. 768 795 Preston v. Grand Collier Dock Co. (1840) 11 Sim. 326 524 Prevost V. Bedard (1915) 51 S. C. R. 149 93 Price V. Anderson (1847) 15 Simons 473 432 Price V. Munro (1885-6) 12 A. R. 453 511, 512 Princess of Reuss v. Bos (1871) L. R. 5 H. L. 176 710 Pringle v. Hutson (1909) 19 0. L. R. 652 402 Printing Co., Re (1878) 8 Ch. D. 535 823 Printing, etc.. Co., Re (1894) 2 Ch. 392 559 Pritchard's Case (1873) L. R. 8 Ch. 956 794 Producers Rock and Gravel Co., Ltd., Re (1913) 14 D. L. R. 289. 745, 747 Provident Life, etc., Co. v. Wilson (1865) 25 U. C. R. 53 ... .283. 284 Provincial Building Society, Re (1891) 30 N. B. 628 323, 800 Provincial Grocers, Ltd., Calderwood's Case (1905) 10 0. L. R. 705 243, 787 Provincial Insurance v. Brown (1860) 9 U. C. C. P. 286 202, 245 Provincial Insurance v. Cameron (1880) 13 C. P. 523 300 Provincial Insurance Co. of Canada v. Shaw (1859) 19 U. C. Q. B. 533 319,331 Provincial Insurance Co. v. Worts, 31 U. C. C. P. 523; (1883) 9 A. R. 56 285 Provision Merchants' Co., Re (1872) 26 L. T. 862 805 Prudential Life Insurance Co., Re Paterson (1918) 1 W. W. R. 105 251 Prudential Trust Co. v. McQuaid (1919) 45 D. L. R. 346 493 Publishers' Syndicate, Re, Hart's Case (1902) 1 O. W. R. 508. .. . 240 Publishers' Syndicate, Re, Mallory's Case (1902) 3 0. L. R. 552. . 242, 248 Publishers' Syndicate, Paton's Case (1903) 5 0. L. R. 392.... 331, 501, 502 TABLE OF CASES. Ixiil Pud— R. V. G. PAGE Puddephat v. Leith (1916) 85 L. J. Ch. 185; (1916) 1 Ch. 200.. \12, 342 Pukulski V. Jardine (1912) 26 O. L. R. 323; 5 D. L,. R. 242 .... 509, 511, 512, 737 Pulbrook, Ex parte (1869) L. R. 4 Ch. 627 724 Pulbrook V. Richmond Mining Co. (1878) 9 Ch. D. 610.. 446, 447. 448 Purdom v. Ontario Loan (1892) 22 0, R. 597... 363, 451, 514, 523, 525 Pure Canadian Silver Black Fox Co. v. Morrison, 24 D. L. R. 915. 407 Pure Spirit Co. v. Fowler (1895) 25 Q. B. D. 235 689 Pyle Works, Re (1890) 44 Ch. D. 534 280, 819 Pyle Works, No. 2, Re (1891) 1 Ch. 173 481 Q. Qu'Appelle Valley Co., Re (1888) 5 Man. R. 160 685, 688, 689, 705, 707, 709 Quartz Hill Gold Mining Co. v. Beall (1882) 30 W. R. 583 . . .519, 520 Quartz Hill Consolidated Gold Mining Co. v. Eyre (1883) 11 Q. B. D. 674 715 Quebec and Richmond Ry. Co. v. Dawson (1851) 1 L. C. R. 366. . 69 Queddy R. Boom Co. v. Davidson, 10 S. C. R. 222 27 Quebec Agricultural Implement Co. v. Herbert (1874) 1 Q. L. R. 363 481 Queen, The v. The Bank of Upper Canada (1849) 5 U. C. R 338. 454 Queen v. Clements (1891) 24 N. S. 64 335 Queen, The v. Hespeler (1854) 11 U. C. R. 22 457 Queen v. Gillespie ( 1898) 1 Can. Cr. Cas. 551 502 Queen v. Prosser, 11 Beav. 813 78. 83 Queen, The v. Sir Charles Reed (1880) 5 Q. B. D. 483 360 Queen, The v. Toronto Railway Co. (1898) 30 O. R. 214 551 Queen's Benefit Building Society, Re (1871) L. R. 6 Ch. 815. .704, 720 Queen City Plate Glass Co. (1909-10) 1 0. W. N. 863 504 Queen City Refining Co., Re (1885) 10 O. R. 264 227, 256, 785, 786, 787 Queen City Refining Co.. Re, April 11. 1885 (unreported) 786 Quinn v. School Trustees (1856) 7 U. C. R. 130 127 R. R. v. Balliff.s of IJf^wdlfy (1712) 1 P. Wms. 207 546 R. v. Bedford Level (1805) 6 East 368 460 R. v. Birmingham Ry. Co. (1842) 3 Q. B. 223 149 Reg. V. Blrt (1894) 63 .T. P. 328 •• 503 R. V. Bower (1823) 1 B. & C. 492 490 R. V. Bird (1811) 13 East 367 510 R. V. Brady, 26 U. C. R. 13 844 R. V. Catholif Life and Fire Insurance Co. (1883) 48 L. T. 675. . 556 R. V. D'Oyly (1840) 12 A. & E. 139 530 R. V. Cie de Ch. de Fer., M. & O. 14 Q. L. R. 255 72 R. V. Esdalle (1858) 1 P. & F. 213 421 R. V. Gaborian (1809) 11 East 77 527 R. V. Garvin (1909) 18 O. L. R. 49 633 ixiv TABLE OF CASES. R, V. G.— Rea I'AOE , R. V. Gwyu (1767) 1 Stra. 401 559 R. V. Hays (1907) 14 0. L. R. 201 498 R. V. Heudrie (1906) 11 0. L. R. 202 498 R. V. Hill (1825) 4 B. & C. 426 516 R. V. Laughorne (1836) 4 A. & E. 538 515, 516 R. V. Mariquita (1858) 1 E. & E. 289 533 R. V. Meicliant Tailors' Company, 2 B. & Aid. 115 534 R. V. Mothersill (1764) 1 Stra. 93 559 R. V. Tyler & Co. (1891) 2 Q. B. 588 149 R. V. Wilt£, etc.. Navigation Co. (1874) 20 L. T. 922 533 R. V. Wimbledon (1882) 8 Q. B. D. 459 530 Reg. V. Aruaud (1846) 9 Q. B. 806 49, 546 Reg. V. The Eastern Archipelago Company, 1 Ellis & Blackburn 354 79 Reg. V. Bank of Nova Scotia (1884) 11 S. C. R. 1 809 Reg. V. Hill (1825) 4 B. & C. 426 514 Reg. V. Justices of Shropshire, 8 Ad. & E. 173 -. . . 519 Regina v. Mayor of Wigan (1885) 14 Q. B. D. 908 450 Regina v. St. Paul Garden, 14 L. J. M. C. 109 228 Radford & Bright, In re [1901] 1 Ch. 272 752 Railway Finance Co., In re (1866) 14 W. R. 785 723 Railway Finance Co., Re (1866) 14 W. R. 956 752 Railway Sleepers, etc., Co., In re (1885) 29 Ch. D. 204 519 Railway Steel and Plant Co. fex parte, In re Taylor (1878) 8 Ch. D. 183 743, 747 Railway Steel and Plant Co., Ex parte. In re Williams (1878) 8 Ch. D. 192 746, 747 Railway Time Tables Co., Re (1895) 1 Ch. 255 805 Railway Time Table Co., In re. Ex parte Sandys (1889) 42 Ch. D. 98 158, 787, 789 Railway Time Tables, In re (1894) 62 L. J. Ch. 935 379 Rainy Lake Lumber Co. In re (1888) 15 A. R. 749 760 Ramsgate Hotel Co. v. Montefiore (18G6) L. R. 1 Ex. 109 226, 786 Ramskill v. Edwards (1885) 31 Ch. D. 100 497 Ranee's Case (1871) L. R. 6 Ch. 104 418, 424, 493, 682, 802 Rand Gold Mining Co., In re (1904) 2 Ch. 468 298 Randt v. Wainwright (1901) 1 Ch. 184 .294, 296 Rankin v. Hop and Malt Exchange, etc., Co. (1869) 20 L. T. 207. 789 Raphael v. McFarlane, 18 S. C. R. 183 8 Rapid City Farmers' Elevator Co., Re (1894) 9 Man. R. 574 684, 685, 686, 689, 691, 709 Rapid City Farmers' Elevator Co. (1895) 10 M. R. 681 691 Rapier v. London Tramways Co. (1893) 69 L. T. 361 149 Rascony Woollen, etc., Co. v. Desmarais (1886) M. L. 2 S. C. 381. 239, 281 Rashdall v. Ford (1866) L. R. 2 Eq. 750 361 Raven Lake Portland Cement Co., Re, National Trust Co. v. Trusts and Guarantee (1911) 24 O. L. R. 286 736, 740, 741, 742, 860, 875, 876 Real Estate Investment Co. v. Metropolitan Building Society (1883) 3 0. R. 476 484 TABLE OF CASES. IxV Rea— Rob PAGE Reardon v. Franklin (1917) 35 D. L. R. 380; 51 N. S. R. 161; 55 S. C. R. 613 337 Redfield v. Wickham, 13 A. C. 467 399 Redpath Motor Vehicles Co., Re (1904) 4 O. W. R. 515 704 Red Rock Mining Co., Re (1889-90) 61 L. T. 785 701 Redfern v. Poison (1894) 25 0. R. 321 735 Reese River, &c., Co. v. Smith (1869) L. R. 4 H. L. 64 201 Regent United Service Stores, Re (1878) 8 Ch. D. 75 692 Regent United Service Stores, In re (1878) 8 Ch. D. 616 ....745, 748 Regent's Canal. Re (1875) 3 Ch. D. 411 768, 776 Reid v. Explosives (1887) 56 L. J. Q. B. 388 415 Reid V. Whitehead (1864) 10 Gr. 446 107 Republic of Bolivia Syndicate. Limited, Re (No. 2) (1914) 1 Ch. 139 542 Residential Building Co., Re (1916) 26 Man. L. R. 638 829 Retail Merchants Association, Ltd., Re (1913-4) 7 Alta. L. R. 322 637 Reuckwald v. Murphy (1914) 28 D. L. R. 474, 32 O. L. R. 133 ... 511 Renter v. Electric Telegraph (1856) 6 E. & B. 341 485 Rhodesia aoldfields, Ltd., In re (1910) 1 Ch. 239 384. 818 Rhydydefed Colliery Co., Ex p. (1858) 3 De G. & J. 80 713 Rica Gold Washing Co., Re (1879) 11 Ch. D. 36 688, 704 Rich V. Melanchton Board of Health (1912) 26 0. L. R. 48 335 Richards v. Producers Rock and Gravel Co. (1914) 17 D. L. R. 588 731, 747, 831 Richardson v. Urban Mutual, etc., Co. (1916) 28 D. L. R. 12; 26 Man. L. R. 372 127 Richardson v. Williamson (1871) L. R. 6 Q. B. 276 360, 375 Riche V. Ashbury Ry. etc., Co (1874) L. R. 9 Ex. 224 88 Richelieu and Ontario Navigation Co. v. S.S. " Imperial " (1908-9) 12 Ex. Ct. R. 243 740, 745 Richmond's Case (1858) 4 K. & J. 305 295, 303 Rielle v. Reid (1899) 26 A. R. 54 6, 33, 544 Rigaud Granite Co. v. Wylie (1916-7) Que. 18 P. R. 266 756 Riley v. Curtis's and Harvey (1920) 59 S. C. R. 206 856 Riley v. Warden (1848) 2 Ex. 59 508 Risk V. Sleemin (1874) 21 Gr. 250 839 Risier v. Alberta Newspapers, Ltd. (1919) 46 D. L. R. 536... 739, 744 Ritchie v. Central Ontario Ry. (1904) 7 0. L. R. 727 415 Ritchie v. Vermillion (1901) 1 O. L. R. 654; (1902) 4 O. L. R. 588 446, 484 Ritchie Hearn Co.. Re (1905) 6 O. W. R. 474 814, 816 Ritso's Case (1877) 4 Ch. D. 774 786 Robert v. Eastern Townships Bank (1908) Que. 17 K. B. 157... 231 Robert V. Montreal Trust (1918) 56 S. C. R. 342, 41 D. L. R. 173. 200 Roberts, Ex parte (1852) 1 Drew 201 228, 789 Robertson v. Hochelaga Bank (1881) 4 L. N. 315 S. C 300 Robertsonville v. Bilodeau. 46 Que. S. C. 5 230 Robillard v. Blanchet (1901) Q. R. 19 S. C. 383 737, 875 Robinson Printing Co. v. Chic. Ltd. (1905) 2 Ch. 123 414 Robson V. Sniilii (1895) 2 Ch. 118 394 D.C'.A. E Ixvi TABLE Oi'^ CASES. Roc— Rya I'AGK Koche. V. Johnson (IDIU) 53 S. C. R. 18, reversing 24 D. L. R. ;;or) 222, 336 Rockwood Agricultural Society, Re (1899) 12 Man. R. 655 370 Rodney Casket Co.. In re (1906) 12 O. L. R. 409 692, 709 Rodocanachi Sons & Co. v. Milburn (1886) 18 Q. B. D. 67 339 Roe V. Bank of British North America (1870) 20 C. P. 351 845 Roe V. Royal Canadian Bank (1868) 19 C. P. 347 845 Rogers v. Hersey (1864) 15 L. C. R. 141 230 Rogers Hardware v. Rogers (1913) 10 D. L. R. 541 472 Rolfe V. Canadian Timber, etc., Co. (1906) 12 B. C. R. 363.. 415, 733 Roots V. Williamson (1888) 38 Ch. D. 485 320 Roray v. Howe Sound (1915) 22 D. L. R. 855 475, 499 Rose V. Garden (1877-8) 3 Q. B. D. 235 727 Rose V. McLean (1897) 24 A. R. 240 61 Rose V. Rose (1914-5) 7 0. W. N. 416 172 Rosedale. In re (1889) 19 C. L. T. 311 785, 786, 789 Ross V. Angus (1883) 6 L. N. 292 292 Ross V. B. C. Refining Co.. 16 B. C. R. 227 522, 523 Ross V. Dunn (1886) 16 A. R. 552 839 Ross V. Fiset (1882) 8 Q. L. R. 251 Ill, 330 Ross V. Machar (1885) 8 O. R. 417 291, 313 Ross et al v. Perras (1894) 5 R. J. Q. (S. C.) 470 765 Ross V. Walker (1908-9) 10 Que. P. R. 428 777 Ross V. Worthington (1882) 5 L. N. 140 330 Rotherham Alum Co., Re (1884) 25 Ch. D. 103 120, 212 Rountree v. Sydney (1908) 39 S. C. R. 614 484 Rowell V. Jno. Rowell & Sons, Ltd. (1912) 2 Ch. 609 308 Rowland's Case (1880) 42 L. T. 785 798 Royal Bank v. B. C. Accident (1917) 35 D. L. R. 650 103, 107, 374 Royal Bank of India's Case (1869) L. R. 4 Ch. 252 218 Royal British Bank of Turquand, 5 E. & B. 248, 6 E. & B. 327.. . 67, 102, 137, 368, 376, 489 Royal Canadian Bank v. Kerr (1870) 17 Gr. 47 839 Royal Canadian Insurance Co. v; Montreal Warehousing Co. (1880) S. C. 3 L. N. 155 108 Royal Paper Box Co. v. Canada Cement, etc.,. Co. (1915) 48 Que. S. C. 287 767 Royal Trust Co. v. Atlantic and Lake Superior Ry. (1907-12) 13 Ex. Ct. Rep. 42 401 Royal Trust Co. v. Baie des Chaleurs Ry. (1907-12) 13 Ex. Ct. Rep. 1 400 Ruben v. Great Pingall (1906) A. C. 439 131, 145, 380 Rudolph V. Macey (1906) 3 W. L. R. 52 470 Ruethel Mining Co. v. Thorpe (1907) 9 0. W^ R. 942; (1907) 10 0. W. R. 222 211, 472, 479 Ruffer V. Rattray (1911) Q. R. 39 S. C. 345 766 Rushworth's Case (1892) 66 L. T. 48 795 Russell Cordner & Co., Re (1891) 3 Ch. 175 704 Russell Literary, &c., Association, In re; Flggins v. Baghino (1898) 2 Ch. 72 58, 59 Rutherfurd's Case (1879) 4 App. Cas. 548 323 Ryan v. Terminal City Co. (1893) 25 N. S. 131 149, 150 Ryan v. Wills (1919) 43 0. L. R. 624 508 TABLE OF CASES. Ixvii s. St. J — Sco PAGE St. John Bridge Co. v. Woodward (1840) 3 N. B. 1 Kerr 29 285 St. John Building Society, Re (1889) 28 N. B. R. 597 800 St. John Building Society, Ex p.; Haggarfs Case (1890) 30 N. B. R. 251 803 St. Lawrence Furniture Co. v. Binet (1915) 24 Que. K. B, 405, 25 D. L. R. 316 420 St. Roch Hotel v. Barbeau (1915) 48 Que. S. C. 94 201, 248 St. Stephen Branch Ry. v. Black (1870) 13 .N. B. 139 292, 447 St. Thomas' Dock Co., Re (1876) 2 Ch. D. 116 712 Sailing Ship " Kentmere," In re (1897) W. N. 58 701 Salisbury Gold Mining Co. v. Hathorn (1897) A. C. 268 526 Salisbury, Jones' and Dales' Case (1895) 1 Ch. 333 724 Salomon v. Salomon (1897) A. C. 22 6. 13, 33, 154. 208, 544, 545 Salter v. Leas Hotel Co. (1902) 1 Ch. 332 417 Sage V. Shore Line (1901) 2 N. B. Eq. 321 415 St. James Club. Re (1852) 2 D. M. & G. 383 682, 697 Salter v. St. Lawrence (1896) 28 N. S. R. 335 882 Samuel v. Jarrah Timber, etc.. Corporation (1904) A. C. 323... 406 Sanders v. St. Neot's Union (1846) 8 Q. B. 810 125 Sandlands, Re, L. R. G C. P. 411 228 Sandusky Coal Co. v. Walker (1896) 27 0. R. 677 215, 216, 786 Sanitary Burial Ass'n.. In re (1900) 2 Ch. 289 770, 776 Sankey Brook Coal Co. (1870) L. R. 9 Eq. 721 364 Sankey Brook Coal Co., No. 2 (1871) 10 Eq. 381 364 Sarazin v. The Bank of St. Hyacinthe, 20 R. L. 580 78 Sarnia Agricultural Implement Manufacturing Co. v. Hutchinson (1884) 17 0. R. 670 549, 766 Sarnia Oil Co., Re (1884) 14 P. R. 435 766 Sarnia Oil Co., Re ( 1893) 15 P. R. 182 855 Sarnia Oil Co., Re (1893) 15 P. R. 347 854, 855, 859 Sarnia Ranching Co.. Re (1915) 8 W. W. R. 697 419, 537 Saskatchewan Coal Mining Co., Re (1890) 6 M. R. 593 776 Saskatchewan Land & Homestead Co. v. Moore (1915) 7 0. W. N. 684; (1915) 8 0. W. N. 525 473 Saunders v. Harvey (1912) Que. 43 S. C. 54 336 Saunders v. Sun Life (1894) 1 Ch. 537 62 Savaria v. Paquette (1901) Q. R. 20 S. C. 314 483 Saw Bill Lake, etc., Co., Re (1903) 2 O. W. R. 1143 832 Scadding v. Lorant (1851) 3 H. L. C. 418 527 Scales V. Irwin (1874) 34 U. C. R. 545 158, 164 Schmidt v. M. Beatty & Sons (1916) 10 0. W. N. 230 131, 144. 482 Schneider v. Laurentlde (1914) 15 Que. P. R. 271 715 Schofif'ld. Re (1879) 12 Ch. D. 337 824 Schofield. Ex p. (1879) 40 L. T. N. S. 464, 823 824 Scholey v. Central Ry. Co. (1870) L. R. 9 Eq. 266 .788, 790 School Commissioners of Ilochelaga v. Montreal Abattoir (1887) 3 M. L. R. (Q. B.) 116 .♦ 411. 745 Schroder's Case (1871) L. R. 11 Eq. 131 797 Scinde Punjab & Delhi Co. (1871) L. R. 6 Ch. 53 (n) 805 Scott V. Colburn (1858) 26 Beav. 276 371. 376 Ixviii TABLE OF CASES. • Soo — Sie PAGE Scott V. Hyde (1909) Q. R. 18 K. B. 138 697 Scott and Jackson (1893) W. N. 184 721 Scott. Ke V. Silver (1915) 8 O. W. N. 552 737 Scott V. Siemens (1912) 18 O. AV. R. 538 834 Scottish Petroleum Company, In re (1883) 23 Ch. D. 413 200, 201, 785, 788, 790 Sea Coast R. R. v. Wood, 65 N. J. Eq. 530 . 215 Seagram v. Pneuma Tubes, Ltd. (1919) 43 0. L. R. 513 (App. Div.) 556, 658 Seagram v. Pneuma Tubes, Ltd. (1917) 40 0. L. R. 301 658 Segsworth v. Anderson (1894-5) 24 S. C. R. 699 774 Soiffert v. Irving (1888) 15 O. R. 173 133, 215, 550 Selkirk v. Windsor (1901) 21 O. L. R. 109; 22 0. L. R. 250 440 Semi-Ready v. Semi-Ready (1910) 15 B. C. R. 301 62 Severn R. Co., Re (1896) 1 Ch. 564 419 Sewell's Case (1868) L. R. 3 Ch. 138 788 Shackell v. Charlton [1895] 1 Ch. 378 812 Shackleford's Case (1866) 1 Ch. 567 789 Shackleford v. Dangerfleld (1868) L. R. 3 C. P. 407 287 Sharpe, Re (1892) 1 Ch. 154 257, 423, 467, 497, 761 Sharpe v. Dawes (1876-7) 2 Q. B. D. 26 531 Sharpley v. South Ry. Co. (1876) 2 Ch. D. 663 790 Shaughnessy v. Imperial Trust Co. (1904) 3 N. B. Eq. 5 413 Shaver v. Cotton (1894) 16 P. R. 278 161 Shaver v. Cotton (1896) 23 A. R. 426. .160, 731, 732, 744, 745, 801, 82i Shaw V. Lawley (1847) 16 M. & W. 810 290 Shaw V. Royce, Ltd. (1911) 1 Ch. 138 417 Shaw V. Taxi Concessions (1913) 1 Ch. 292 529 Sheffield, etc., Society, Re, 22 Q. B. D. 476 6 Sheffield, etc.. Society v. Aizlewood (1889) 44 Ch. D. 412 ...107, 495 Sheffield Corporation v. Barclay (1905) A. C. 392 344 Shepheard v. Bray (1906) 2 Ch. 235 190 Shepheard v. Broome (1904) A. C. 342 189 Shepherd's Case (1866) 2 Ch. App. 16 315 Sheppard v. Bonanza, etc., Co. (1894) 25 0. R. 305. .107, 110, 141, 367 Sherker v. Rudner (1911) 39 Que. S. C. 44 450, 451, 458, 459, 482 Sherrington's Case (1885-6) 31 Ch. D. 120 246 Sherwell v. Combined Incandescent Co. (1907) W. N. 110; 28 T. L. R. 482 185 Shewell's Case (1867) L. R. 2 Ch. 387 783 Shields Marine Insurance Co. (1867) W. N. 265, 296 704 Ship's Case, 13 W. R. 450, 12 L. T. 728 782 Shirleys, Ltd, Re (1916) 29 D. L. R. 273 749, 814, 816, 827, 830 Shoolbred v. Clark (1890) 17 S. C. R. 265. .679, 681, 694, 753, 754, 859 Shoolbred v. Union Fire (1887) 14 S. C. R. 624 .' 750, 751 Shortreed v. Raven Lake (1909) 13 0. W. R. 720 410 Shrewsbury v. Hart, 1 C. & P. 114 559 Shropshire & Union Ry. Co. v. The Queen (1875) L. R. 7 H. L. 496, 509 ; 317 Siche Light Co. v. Fortin, 13 Que. P. R. 235 (S. C.) 850 Sichell's Case (1867) L. R. 3 Ch. 119 315, 760, 784 Siemens Bros & Co. v. Burns (1918) 87 L. J. Ch. 572 172 TABLE OF CASES. Ixix Sil— Soc PAGE Silkstone Coal Co. v. Edey (1900) 1 Ch. 167 759 Silkstone Colliery Co., Re (1875) 1 Ch. D. 38 517 Silkstone & Dodworth Iron Co., Re (1881) 17 Ch. D. 158 749 Silliker Car Co. v. Donahue, 44 N. S. R. 315 202 Silliker Car Co., The v. Evans (1909) 7 E. L. R. 560 248 Silsby V. Village of Dunville, 31 C. P. 301, 8 A. R. 524 122 Silver Valley Mines Co., Re (1882) 21 Ch. D. 381 724, 762 Simm V. Anglo-American (1879) 5 Q. B. D. 188 798 Simpson v. Dennison (1852) 10 Hare 51 37, 525 Simpson v. Molsons Bank (1895) A. C. 270 263 Simpson & Hunter, Re (1916) 34 W. L. R. 850 720 Simpson v. Westminster Palace Hotel (1860) 8 H. L. C. 712 37 Simson, Ex p., De G. 9 843 Simultaneous Colour Printing Co. v. Foweraker (1901) 1 K. B. 771 381 Sinclair v. Brougham (1914) A. C. 398 103, 359. 374 Sinclair v. Toronto Brick Co. (1916) 10 O. W. N. 250 142, 143 Skegness, Re (1889) 41 Ch. D. 215 213 Skinner v. City of London (1885) 14 Q. B. D. 882 336 Skinner v. McLeod. 15 N. B. 2 Pugs 134 836, 838 Slatter's Executors. Ex p. (1851) 4 DeG. & Sm. 34 807 Sleeman v. Barrett (1864) 2 H. & C. 934 508 Sloan's Case (1894) 21 A. R. 66, 22 S. C. R. 644 797 Slogger Automatic Feeder Co., In re (1915) 84 L. J. Ch. 587 412 Sloman v. Governor of New Zealand (1876) 1 C. P. D. 563 . , 548 Smart v. Bowmanville Machine, etc., Co., 25 C. P. 503 232 Smart v. West Ham Union (1855) 10 Exch. 867 126 Smith V. Anderson (1880) 15 Ch. D. 275 467 Smith V. Bank of Nova Scotia (1882) 8 S. C. R. 558 325, 334 Smith V. Brown [1896] A. C. 614 794 Smith V. Canada Car Co. (1876) 6 P. R. 107 335 Smith V. Chadwick (1884) 9 A. C. 187 193 Smith V. Goldsworthy, 4 Q. B. 430 6 Smith V. Gowganda (1909-10) 44 S. C. R. 621 Ill, 293, 305, 323,330, 791 Smith V. Hall Glass Company, 8 C. B. 668; 11 C. B. 897 136 Smith V. Humbervale Cemetery Co. (1915) 33 O. L. R. 452 ..90, 597 Smith, Knight & Co., Re (1868) 16 W. R. 1104 772 Smith V. London Gas Co. (1859) 7 Gr. 112 127 Smith V. McLean. 25 Gr. 567 842 Smith V. Paringa Mines (1906) 2 Ch. 193 516 Smith V. Provincial Treasurers for Nova Scotia and Quebec (1919) 58 S. C. R. 570 347 Smith V. Rogers (1899) :50 0. R. 256 313, 317, 319. 341 Smith V. Walkorvllle (1893) 23 A. R. 95 315. 317 Smith V. Western Canada Flour Co. (1911 ) 17 W. L. R. 531 399 Smith. Sid B. Lumber Co., Ltd., In ro (1917) 3 W. W. R. 844.809, 810 Smyth V. .Morton, 30 C. P. 500 843 Sneath v. Valley Gold Co. (1893) 1 Ch. 477 417 Snetzinger v. Leitch ( 1 901 ) 32 O. R. 440 320 Snow V. Ben.son (1908) 2 W. L. R. 359 505 SocietC- Canadienne, etc. v. Daveluy (1892) 20 S. C. R. 449 327 IXX TABLE OF CASES. Soc — Sta PAGE Sorii'tt' Gont>rale de Paris v. Tramways Union (1884) 14 Q. B. D. 424 262 Socioto G#neralo v. Walker. 1 App. Cas. 20 262 Solicitors, Re (1913) 27 0. L. R. 147 629 Somervill^'s Case (1870) L. R. G Ch. 266 785 Somy, L. v. Compagnie d'Imprimerie Industrielle (1902) Que. 5 P. R. 195 731 Soucy V. Electric (1902) 5 Q. P. R. 105 738 South African Territories v. Wallington (1908) A. C. 309 385 South Barrule Co., Re (1869) L. R. 8 Eq. 688 730 South East Corporation, Re (1915) 23 D. L. R. 724 717 South of Ireland Colliery v. Waddle (1869) L. R. 4 C. P. 617. .118, 128 South Kensington Co-operative Stores, In re (1881) 17 Ch. D. 161 749,750 South London Fish Market Co., In re (1888) 39 Ch. D. 324, 331. 443, 472 South Staffordshire v. Burnside (1850) 5 Ex. 129 801 South Western of Venezuela Ry., In re (1902) 1 Ch. 701 502 Southall V. British Life Assurance Society, L. R. 6 Ch. 614; L. R. 11 Eq. 65 593 Southern Brazilian Rio Grande del Sul Ry. Co. (1905) 2 Ch. 78. 358, 377, 404 Sov«reen v. Whiteside (1906) 12 0. L. R. 638 436, 437, 444, 450, 455, 514 Sovereen Mill, etc., Co. v. Simcoe Mill, etc., Co. (1904) 3 0. W. N. 681 61 Sovereign Bank. Re (1915) 48 N. B. R. 519 873 Sovereign Bank of Canada, Re (1915) 34 O. L. R. 577 857, 862 Sovereign Bank of Canada, Re Barnes's Case (1916-7) 11 O. W. N. 103 251 Sovereign Bank of Canada, Re, Clark's Case (1915-16) 35 O. L. R. 448; 27 D. L. R. 253 251, 294, 311 Sovereign Bank v. Mclntyre (1909-10) 1 0. W. N. 254 251 Sovereign Life v. Dodd (1892) 2 Q. B. 573 818 Spackman v. Evans (1868) L. R. 3 H. L. 171 294 Spanish Prospecting Co., In. re (1911) 1 Ch. 92 428 Spargo's Case (1873) L. R. 8 Ch. 407 795 Sparks v. Liverpool Waterworks Co. (1807) 13 Ves. 428 295 Spartali & Tabor, Ex p.; Re International Contract, Co. (1866) 14 L. T. 726 710 Spence's Patent Non-Conducting Composition Co., Re (1869) L. R. 9 Eq. 9 686 Spiers & Bevan's Case (1899) 1 Ch. 210 793 Sprouted Food Co., Re, Hudson's Case (1905) 6 O. W. R. 514.. 331, 532, 559 Squire v. Watt (1869) 29 U. C. R. 328 837 Stace & Worth's Case (1869) L. R. 4 Ch. 682 593, 788 Stacey. F. & Co., Ltd. v. Wallis (1912) 105 L. T. 544 151 Stadacona Fire Ins. Co. v. Mackenzie (1878) 29 U. C. C. P. 10. . . 286 Staffordshire Gas Co. (1892) 66 L. T. 413 789 Stagg V. Medway (1901-2) 50 W. R. 446 371 TABLE OF CASES. Ixxi Sta Ste PAQ^ Standard Bank v. Stephens (1908) 16 O. L. R. 115; (1908) 11 0. W. R. 582 156, 201, 236, 239, 363 Standard Cobalt. Re (1911) 18 0. W. R. 555 833 Standard Construction Co., Ltd. v. Crabb (1914-5) 30 W. L. R. 151; 7 W. W. R. 719 482 Standard Fire, Re. Barber's Case (1885-6) 12 A. R. 486 789 Standard Fire Ins. Co., Re, Caston's Case (1885) 7 0. R. 448; 12 A. R. 486; 12 S. C. R. 644, and see Caston's Case 789 Standard Fire Insurance Co., Re, Kelly's Case, 12 A. R. 486 593 Standard Fire Insurance Co., Re, Turner's Case (1885) 7 O. R. 448 246, 789 Standard Fire Insurance Co.. Re (1885) 7 O. R. 448; 12 S. C. R. 644 683 Standard Fire Ins. Co., Re (1885) 7 0. R. 448; 12 A. R. 486; 12 S. C. R. 644 785 Standard Ideal v. Standard Mfg. Co. (1911) A. C. 78 62 Standard Mfg. Co., Re (1891) 1 Ch. 627 393 Standard Mutual Fire Ins. Co., Musson's Case (1910) 1 0. W. N. 974; 46 Can. Law J. 505 171 Standard Mutual v. Dominion Mutual, etc., Co. (1910) 11 Que. P. R. 392 766 Standard Trust v. South Shore (1902-3) 5 Que. P. R. 257 143 Stanhope's Case (1850) 3 DeG. & S. 198 303 Stanhope Silkstone Collieries Co., Re (1879) 11 Ch. D. 160 748 Staples V. Eastman Photographic Materials (1896) 2 Ch. 303 258 Charles Stark Co., Re (1893) 15 P. R. 471 770 State of Wyoming Syndicate, Re (1901) 2 Ch. 431 518 Stavert v. Lovitt (1907-8) 42 N. S. R. 449 427, 429, 430, 493, 494 Stavert v. McMillan (1911) 24 O. L. R. 456; (1913) 12 D. L. R. 113 Ill Steel Company of Canada, Re (1884) N. S. (5 R. G.) 49 696 Steel Company of Canada, In re (1884) 17 N. S. R. 49 703 Steel Company of Canada, In re (1885) W. N. 79 768 Steel V. N. Metropolitan R. Co. (1867) L. R. 2 Ch. 237 525 Steindler v. Maclaren (1909) 14 0. W. R. 647 456 Stephens v. Gerth et al., In re, Ontario Express (1895) 24 S. C. R. 716 856 Stephens v. McArthur, 19 S. C. R. 446 841 Stephens v. Mysore Reefs (1902) 1 Ch. 745 101 Stephens v. Riddell (1910) 21 0. L. R. 484 784 Stephenson v. Yokes (1896) 27 0. R. 691 232, 454, 474, 481, 789 Stevens V. llounslow Burial Board (1889) 61 L. T. 839 121 Stevens v. London Steel Works Company. Delano's Case (1888) 15 O. R. 75 202. 224, 786, 788 Stevens v. South Devon R. Co. (1851) 9 Ha. 313 418 Stevenson & Brodie, Ltd.. Re (1911) 18 0. W. R. 1G3; 2 O. W. N. 435 850 Stevenson v. McLean (1880) 5 Q. B. R. 346 242 Stevenson v. Wilson (1907) So. St. Sess. 445 37 Stewart's Case (1866) L. R. 1 Ch. 574 197 Stewart v. Lepage (1916) 53 S. C. R. 337 736, 738, 871, 872, 874, 875, 877 Ixxii TABLE OF CASES. Ste — Tai PAGE Stewart & Matthews. Ltd., Re (1916) 26 Man. L. R. 277; 34 W. L. R. 47 696, 698, 730 Stewart Gold Dredging Co., Re (1912) 7 D. L. R. 736 695 Stewart Howe v. Meek ( 1913) 9 D. L. R. 484 156, 866 Stickncy v. Buckel (1905) 6 O. W. R. 751 469 Stimson v. Northw^est Cattle Co. (1902-3) 5 Que. P. R. 181 751 Stockeu's Case (1868) 3 Ch. 415 297, 298 Stoneburgh v. Brighton (1859) 8 C. P. 155 122 Storey, Ex p. (1890) 62 L. T. 791 788 Stothers v. Toronto General Trusts Corporation (1919) 44 O. L. R. 432 400 Straffon's Executors (1852) 1 De G. M. & G. 516; 4 De G. M. & Sm. 256 789 Strand Music Hall Co. (1865) 3 DeG. & S. 147 380 Stranton Iron and Steel Co. (1873) L. R. 16 Eq. 559 325, 528 Strapp V. Bull (1895) 2 Ch. 1 415 Stratford Fuel, Re (1913) 28 0. L. R. 481, affirmed (1914-5) 50 S. C. R. 100, sub nom. Brown v. Coughlin 810, 821, 826 Stratford, etc., Co. v. Mooney (1910) 21 0. L. R. 426 208 Strathy Wire Fence Co., Re (1904) 8 0. L. R. 186 689, 690, 714, 716, 717, 718 Strawbridge, Ex p. (1883) 25 Ch. D. 266 807 Streatham Estates Co., Re (1897) 1 Ch. 15 364 Strick V. Swansea Tin-plate Co. (1887) 36 Ch. D. 558 805, 850 Stringer's Case (1869) L. R. 4 Ch. 475 418, 496, 682, 802 Strong V. Carlyle Press (1893) 1 Ch. D. 268 411 Stroud V. Royal Aquarium (1903) 83 L. T. 243 501 Struthers v. Mackenzie (1897) 28 0. R. 381 105, 360, 375, 496 Stuart V. Hamilton Jockey Club (1910) 2 0. W. N. 673, 1402 346 Sturge V. Eastern Union R. Co. (1855) 7 D. M. & G. 158 524 Sturgis (British) Motors Power Syndicate, In re (1886) 53 L. T. 715 725 Suburban Hotel Co., In re (1867) L. R. 2 Ch. App. 737 701 Sullivan v. Mitcalfe (1880) 5 C. P. D. 455 181, 186 Summerside Electric, In re (1908) 5 E. L. R. 129 368 Sun Lithographing Co., Re, Farquhar's Claim (1892) 22 0. R. 57 844 Sun Lithographing Co., Re (1893) 24 0. R. 200 772, 773, 807 Sunderland Building Society, Re (1888) 21 Q. B. D. 349 850 Superior Copper Co., Ltd. v. Perry & Sutton (1919) 17 0. W. N. 90; (1918) 44 O. L. R. 24 667 Superior Copper Co., Ltd. v. Perry (1918) 42 0. L. R. 45 667 Suter V. The Merchants Bank, 24 Gr. 365 842 Sutton V. English & Colonial (1902) 2 Ch. 502 445, 446 Swayze v. Grobb (1915) 8 0. W. N. 316 134, 234, 482 Sweeney v. Bank of Montreal (1885) 18 S. C. R. 183; (1887) 12 A. C. 617 263 Sylvester v. McQuaig (1878) 28 U. C. C. P. 443 216 Tailby v. Official Receiver (1888) 13 App. Cas. 523 381 Taite's Case (1867) L. R. 3 Eq. 795 788 TABLE OF CASES. Ixxiii Tarn — Tit page Tamplin's Case (1892) W. N. 94 197 Tanguay v. Royal Paper Mills (1907) Q. R. 31 S. C. 397. .96, 144, 486 Tanner's Case, Ex p. (1852) 21 L. J. Ch. 584 793 Taurine Co., Re (1883) 25 Ch. D. 118 486 Taylor, Ex p. (1877) W. N. p. 136 735 Taylor v. Cobourg. etc., Co. (1874) 24 C. P. 200 119 Taylor v. Chichester Ry. Co. (1867) L. R. 2 Ex. 356 481 Taylor v. Midland Ry. Co. (1866) 8 W. R. 401 261 Telescriptor Syndicate, Re (1903) 2 Ch. 174 729 Telford v. Metrop. Board of Works (1872) L. R. 13 Eq. 574 525 Temiscouta v. Macdonald (1900-1) 3 Que. P. R. 462 462 Temiskaming Telephone Co. v. Town of Cobalt (1918) 42 O. L. R. 385; (1919) 44 0. L. R. 366; (1919) 49 S. C. R. 93 92 Temperance Colonization v. Fairfield (1889) 16 0. R. 544 192 Tench V. G. W. R. Co. (1872) 32 U. C. R. 452 149 Tennent v. City of Glasgow Bank (1879) 4 App. Cas. 615.201, 733, 788 Tessier v. Henderson (1899) 1 Ch. 861 476 Tewkesbury Gas Co. (1911) 2 Ch. 279; (1912) 1 Ch. 1 381. 405 Thames Haven Dock, etc., Co. v. Hall, 3 Eng. Ry. Cases 441 460 Thames Navigation Co., Limited v. Reid (1886) 13 A. R. 303.496, 785 Thayer v. Nathan. (1897) 17 Tex. Cir. App. 382 10 Theatre Amusement Co. v. Stone (1914) 50 S. C. R. 32 447, 449, 459, 477 Theatrical Trust, Re (1895) 1 Ch. 771 156, 157, 793 Therien v. Brody (1893) 4 Que. S. C. 23 467 Thibaudeau v. Paul (1894) 26 O. R. 375 396 Thomas, In re (1916) 2 Ch. 331 433 Thomas, A. E., Ltd. v. Standard Bank (1909-10) 1 O. W. N. 379, 548 104, 130, 145, 152 Thomas v. Patente Lionite Co. (1881) 17 Ch. D. 250 748, 823 Thompi;on v. Big Cities Realty, etc. Co. (1910) 21 0. L. R. 394. 152, 816 Thompson v. Brantford, etc., Co. (1898) 25 A. R. 340.. 119. 128, 129, 134, 135, 137, 140, 143, 367, 486 Thompson v. Canada, etc., Ins. Co. (1885) 9 0. R. 284 471 Thompson v. Freeman (1868) 15 Gr. 384 777 Thompson v. Skill (1908) 12 0. W. R. 1033; (1909) 13 0. W. R. 887 229 Thompson & Victoria Ry. Co., Re. 9 P. R. 119 378 Thomson v. Lord Clanmorris (1900) 1 Ch. 718 190 Thome v. City Rice .Mills (1889) 40 Ch. D. 357 407 Thornton v. Sandwich Street, etc., Co. (1866) 25 U. C. R. 591. . . 124 Thorpe v. Tisdale (1909) 13 O. W. R. 1044 478 Thunder Hill Mining Co., Re (1894) 3 B. C. R. 351 826 Thunder Hill Mining Co., Re (1895) 4 B. C. R. 62 788 Thunder Hill & Bowkor. Re (1896) 5 B. C. R. 21 824 Tillsonburgh Agricultural Co. v. Goderlch (1885) 8 0. R. 565.. 223, 683. 785 Tilt Cove Copper Co. (1913) 2 Ch. 588 409 Times Life Assurance and Guarantee Society, In re (I860) L. R. 9 Eq. 382 720,723 Titherington v. Distributors (1906) 8 0. W. R. 329 : 741 Iwiv TABLE OF CASES. Tob- Tur PAGE Tobiqiio Gypsum Co., In re (lOOM) 6 0. L. R. 515. . .726, 727, 728, 737 Todd V. Robinson (1884) 14 Q. B. R. 739 450 Toledo R. R. v. Conn{>eticut Trust (1899) 95 Fed. Rep. 497 13 Toms V. Cumming (1843) 8 Scott N. R. p. 917 556 Tonquoy Gold Mining Co., In re (1906) 1 E. L. R. 142 257 Toronto Brass Co.. Re (1898) 18 P. R. 248 4 703 Toronto Brewing and Malting Co. v. Blake (1882) 2 0. R. 175.. 436, 455, 457, 458, 488, 520 Toronto v. Consumers Gas Co. (1903) 5 0. L. R. 494 434, 445 Toronto Cream and Butter Co.. Re (1909) 14 0. W. R. 81 742 Toronto Gas Co. v. Russell (1850) 6 U. C. R. 567 284, 285, 290 Toronto General Trusts v. Central Ontario Ry. (1905) 10 0. L. R. 347 343,403 Toronto General Trusts v. Central Ontario (1905) 6 0. W. R. 350. 401 Toronto Rowing Club, Re (1916) 37 0. L. R. 23; 31 D. L. R. 686. 858, 863 Tottenham v. Swansea Zinc Ore Co. (1884) 53 L. J. Ch. 776.... 761 Totterdell v. Blue Brick, etc., Co., 1 C. P. 674 139 Totty. Ex p. (1860) 1 Dr. & Sm. 273 772 Tough Oakes v. Foster (1917) 39 O. L. R. 144 457, 616 Towers v. South African Tug Co. (1904) 1 Ch. 558 429 Town of Cobalt v. Temiskaming Telephone Co. (1919) 49 S. C. R. 93 92 Town Topics Co.. Ltd., Re (1911) 20 Man. L. R. 574.... 536. 537, 701 Towner v. Hiawatha Gold Mining Co. (1899) 30 0. R. 547 ..556, 557 Townsend v. Waddell, 18 0. R. 539 551 Traders North Staffordshire Carrying Co., Re (1874) L. R. 19 Eq. 60 748 Traders Trust v. Goodman (1917) 37 D. L. R. 31 233, 240, 241 Traders Trust Co. & Kory, Re (1916) 26 D. L. R. 41 497, 868 Transcontinental Townsite Co., Re (1915) 21 D. L. R. 291; 25 Man. L. R. 193 742 Transcontinental Townsite, Re (1915) 33 W. L. R. 241 765 Transvaal Exploring Co. v. Albion (1899) 2 Ch. 370 794 Transvaal Lands Co. v. New Belgium, -etc., Co. (1914) 2 Ch. 488; (1915) 84 L. J. Ch. 94 476, 477 Travellers v. Travellers (1911) 20 Que. K. B. 437 60, 62 Trevor v. Whitworth (1887) 12 App. Cas. 409 . .296, 306, 307, 308, 795 Trueman's Estate, Re (1872) L. R. 14 Eq. 278 724, 770 Trueman, Hanbury, Buxton & Co., In re (1910) 2 Ch. 498 273 Truman's Case (1894) 3 Ch. 272 786 Trust & Loan v. Hamilton (1858) 7 C. P. 98 382 Trusts and Guarantee v. Abbott Mitchell (1906) 11 0. L. R. 403. . 130, 367, 371, 390, 481 Trusts and Guarantee v. Grand Valley Ry. Co. (1919) 44 0. L. R. 398, 412 403 Trusts and Guarantee v. Munro (1909) 19 O. L. R. 480 732, 735, 736, 847 Tudhope Motor Co., Re (1913-4) 5 0. W. N. 865 718 Turnbull v. Payson, 95 U. S. 418 558 Turner v. Cowan (1903) 34 S. C. R. 160 165 Turquand v. Marshall (1869) L. R. 4 Ch. 376 494 TABLE OF CASES. IxXV Tus— Vag PAGE Tussaud V. Tussaud (1890) 44 Ch. D. 678 62 Twin City Oil v. Christie (1909) 18 0. L. R. 324 ... .96, 233, 284. 436 Twycross v. Grant (1877) 2 C. P. R. 469 181 Tyre v. Wilkes (1856) 13 U. C. R. 482 547 U. Underfeed Stoker Co. of America, Re (1901) 1 0. L. R. 42. . .340, 552 Underwood's Case (1854) 5 D. M. & G. 677 730 Union Bank v. Eureka Woollen Mfg. Co., 33 N. S. R. 302 192 Union Bank v. Gourlay (1916) 31 D. L. R. 565; (1917) 37 D. L. R. 599 ; 35 W. L. R. 935 232, 250 Union Bank v. Indian & General, etc., (1908) 3 E. L. R. 409; (1908) 40 S. C. R. 510 ' 393 Union Bank v. McKillop (1915) 51 S. C. R. 510; 24 D. L. R. 787. 90 Union Bank v. McKillop (1914) 30 0. L. R. 87 104 Union Bank v. Morris & Code (1900) 27 A. R. 396 157, 163. 559, 793, 796, 797, 798 Union Bank of Calcutta, Re (1850) 3 De G. & Sm. 253 695 Union Bank of Canada v. Cross (1912) 5 A. L. R. 489 148 Union Brewery Co., Re (1903-4) 6 Que. P. R. 395 833 Union Fire Ins. Co., Re (1886) 13 A. R. 268 698, 699, 750, 851, 852, 854 Union Fire Ins. Co., Re (1887) 14 O. R. 618; (1890) 16 A. R. 161; (1890) 17 S. C. R. 265 694, 698 Union Fire Ins. Co., Re, Cases of Chabot, et al., 27tli June, (1891) ( unreported ) 799 Union Fire In.surance Co. v. Fitzsimmons (1882) 4 0. R. 359 291 Union Fire Insurance Co. v. Fitzsimmons (1882) 32,C. P. 602 547 Union Fire Insurance Co., Re, McCord's Case (1892)* 21 O. R. 264. 169, 306, 311, 799 Union Fire Insurance Co. v. O'Gara (1883) 4 O. R. 359 227, 281, 283, 284 Union Hill Silver Co., Re (1870) 22 L. T. 200 516 Union St. Jacques v. Bellsle (1874-5) L. R. 6 P. C. Appeals 31. . . 679 United Commercial (1901-3) 9 B. C. R. 528 686, 687 United Service Ass'n., In re (1901) 1 Ch. 97 783 United States v. Grundy. 3 Cranch (U. S.) 337 70 Unity General A.ssurance Association, Re (1863) 11 W. R. 355.. 692 Universal Bank. Re (1866) 14 W. R. 906 713 Universal Banking Corporation, In re, Gunn's Case (1867-8) 3 Ch. App. 40 239, 240 Universal Non-tariff Fire Insurance Co. (1875) W. N. 54 724 Universal Private Telegraph Co., In re (1871) 23 L. T. 884 770 Upton v. Hnfcliinsou (1899) 2 Qu(,\ P. R. 300; R. J. 8 Q. B. 505. 322, 335 Uruguay Central Ry. Co. of Monte Video, Re (1879) 11 Ch. D. 372 709, 711, 714 Valletort Sanitary Steam Lauiuiiy Co.. Re (1903) 2 Ch. 654 393 Vagliano Anthracite Collieries, Ltd. (1910) 79 L. J. Ch. 769 347 Ix.wi TABLE OF CASES. Van— Wal i'A«lJ Vancouver Eugin^'ering Works v. Columbia, etc., Co. (1914) 16 D. L. R. 841 141 Van Huminell v. International Guarantee Co. (1913) 10 D. L. R. 306 -213, 476 Van Sickler v. Mclviiiglit Construction Co. (1914) 31 O. L. R. 531; (1915) 51 S. C. R. 374 129, 139, 145 Van Sittart, In re 1 1893] 2 Q. B. 277 839 Vance v. East Lancashire Ry. Co. (1856) 3 K. & J. 50 37 Verner v. General & Commercial Trust (1894) 2 Ch. 239 421, 426 Victor Wood Works, In re (1908-9) 43 N. S. R. 368 248, 249, 250 Victoria (Malaya) Rubber Estates, Re (1914) 58 S. J. 706 297 Victoria and Montreal Fire, In re (1904) Q. R. 26 S. C. 282 .... 804 Victoria-Montreal Fire Insurance Co., In re (1901-2) 4 Que. P. R. 315 774 Victoria-Montreal Fire, etc., Co. v. Derome (1902) Que. 21 S. C. 319 731, 781 Victoria Montreal Fire Ins. Co. v. Strome (1905) 15 Man. L. R. 645 219 Victoria Mutual Fire Ins. Co. v. Thompson (1882) 32 U. C. C. P. 476; A. R. 620 107, 502 Vilandre v. Allie (1915) 22 D. L. R. 577 224, 239 Villeneuve Cie v. Price Bros., Ltd. (1909) Q. R. 36 S. C. 396. .751, 781 Vimbos, Ltd.. Re (1901) 1 Ch. 470 414 Vipond V. Robert (1908) Que. 17 K. B. 403 440, 443 Vron Colliery Co., In re (1881-2) 20 Ch. D. 442 715 Vulcan Iron Works, In re (1885) W. N. 120 798 Vulcan Iron Works v. Leary (1905) 1 W. L. R. 453 146 W. Waddell v. Ontario Canning Co. (1889) 18 0. R. 41. .473, 488, 523, 525 Wade Co., In re (1908-9) 2 Alta. L. R. 117 300, 791 Wade V. Crain (1915-16) 35 O. L. R. 402; (1918) 55 S. C. R. 208. 408 Wade V. Kenrick (1906) 37 S. C. R. 32 478 Wakefield & Co. (1892) 3 Ch. D. 165 291, 805, 835 Wakefield Mica Co., Re (1906) 7 O. W. R. 104 442 Wakefield Rattan Co. v. Hamilton Manufacturing Co. (1893) 24 O. R. 107 712 Waldron, Drouin Co., Re (1916) 17 Q. P. R. 358 775, 777 Walker's Case (1868) L. R. 6 Eq. 30 787 Walker's Case (1866) L. R. 2 Eq. 554 783 Walker's Cas« (1868) L. R. 6 Eq. 30 315 Walker, S. E., Co., Ltd., Re (1913) 12 D. L. R. 769 815, 816 Wallis, Re (1874) 29 U. C. R. 313 846 Walker, Ex p. (1851) 15 Jur. 853 864 Lancashire Cotton Spinning Co. v. Greatorex (1866) 14 L. T, 290. 864 Walker v. Leduc (1915) 8 W. W. R. 360 838 W^alker Steam Trawl, etc., Co., Re (1908) S. C. 123 Ct. of Sess. 10 F. 123 272 Wall V. London & Northern Assets Corporation (1898) 14 T. L. R. 496, 2 Ch. 469 519 Wallace v. Universal Automatic Machine Co. (1894) 2 Ch. 547.. 407 TABLE OF CASES. Ixxvii Wal — Wes PAGE Wallbridge v. Farrell (1890) 18 S. C. R. 1 399 Wallbrldge Grain Co. (Alta.). Re (1918) 2 W. W. R. 886 305 Wallingford v. Mutual Society (1880) 5 App. Cas. 685 399 Walmsley v. Rent Guarantee Co. (1881) 29 Gr. 484. .359, 360, 496, 551 Ward's Case (1870) L. R. 10 Eq. 659 787 Ward and Henry's Case (1866) 2 Ch. App. 431 315 Ward V. Montreal Storage, etc., Co. (1904) 26, Que. S. C. 310 .. 142, 145, 833 Ward V. Mullin, Q. R. (1905) 14 K. B. 49 773, 808 Ward V. Siemon (1918) 43 O. L. R. 113 90, 111, 202 Ward V. Society of Attorneys (1844) 1 Coll. 370 524, 525 Ware v. Grand Junction Waterworks Co. (1831) 2 R. & M. 470.. 525 Warren v. Jacob (1882) 20 Cb. D. 224 343 Warrant Finance Co., 4 Cb. 643 808 Warren v. Lambetb Water Works (1904-5) 21 T. L. R. 685 501 Wasbington Diamond Co. (1893) 3 Cb. 95 818 Wattrbouse v. Jamieson (1870) L. R. 2 H. L. Sc. 29 760, 761 Waterous Engine Co. v. Town of Palmerston (1892) 21 S. C. R. 556 370 Watkins, Ex p. (1875) 1 Cb. D. 130 770 Watson, Ex parte (1888) 21 Q. B. D. 301 .102, 373 Watson & Co., In re (1899) 2 Cb. 509 793 Watson V. Eales (1856) 23 Beav. 294 299 Watson V. Spratley (1854) 10 Excb. 222 221 Watts V. Bucknall (1903) 1 Cb. 766 183 Wear Engine Works Co., In re (1875) L. R. 10 Ch. App. 188.. 703, 704 Webb V. Earle (1865) L. R. 20 Eq. 556 431 Webb Hale, etc. (1905) 93 L. T. 339 318 Webster's Cas€ (1863) 32 L. J. Cb. 135 295, 300 Webster v. Crickmore, 25 A. R. 97 840, 842 Webster v. Jury Copper Mines (1908) 12 O. W. R. 632 638 Weeks v. Propert (1873) L. R. 8 C. P. 427 102. 361, 375 Welch V. Ellis (1895) 22 A. R. 255 9, 10, 507 Welsbacb Incandescent, etc., Co. (1904) 1 Ch. 87 271 Welton. Ex p. (1895) 1 Cb. 255 789 Welton V. Saffery (1897) W. N. 42 789 Welsh Flannel and Tweed Co., In re (1875) L. R. 20 Eq. 360 734 West Cumberland Iron Co. v. Winnipeg and Hudson's Bay Ry. Co. f 1890 ) 6 Man. R. 396 378 West Devon Great Consols Mine, Re (1884) 27 Ch. D. 109 706 West of England Bank (1879) 27 W. R. 646 819 West London Commercial Bank v. Kitson (1883) 12 Q. B. D. 157; 13 Q. B. D. 360 361 Western Archipelago, 2 El. & Bl. 556 85 Western Assurance Co. v. Taylor (1862) 9 Gr. 471 107, 110 Western Bank of Scotland v. Addie (1867) L. R. 1 H. L. (Sc.) 145 • 194 Western Canada Fire Insurance Co. (Craig's Case) (1914) 19 D. L. R. 1 70 67. 238. •?42 Western Coal Co.. Ltd.. Re (1913) 12 D. L. R. 401 814, 815. 816 Western Fire Insurance Co., Re (1915) 22 D. L. R. 19 201 Iwviii TABLE OF CASES. Wes— Wil i'-^«K Western of Canada Oil Co., Re (1873) L. K. 17 Eq. 1 709, 712 Western Union Fire Insurance Co. v. Alexander Loggin and Holmes (1918) 39 D. L. R. 632 235, 792 West Hartlepool Iron Works Co.. Re (1875) L. R. 10 Ch. 618 ... 710 Westminster Association v. Upward (1880) 24 Sol. J. 690 727 Westmoreland v. Fielding (1891) 3 Ch. 15 802 Westmoreland Bank, Ex p., Allison (1869) 12 N. B. 514 169 Weatherbe v. Whitney (1897) 30 N. S. R. 49 549 Weyburn Townsite v. Honsberger (1918) 43 0. L. R. 451; (1919) "45 O. L. R. 176; (1920) 50 D. L. R. 147 27. 121 Wevmouth Packet Co.. Re (1891) 1 Ch. 66 •' • 805 Whalev v. O'Grady (1912) 22 Man. L. R. 379; 4 D. L. R. 485 145, 150, 220 ^Vhaley Bridge v. Green (1880) 5 Q. B. D. 109 204 Wheal Lovell Mining Co., Re (1849) 1 Mac. & G. 1 708 Wheatcroft's Case (1873) 29 L. T. 324 249 Wheeler v. Freame & Alberta Farmers (1914) 7 W. W. R. 191.. 523, 549 Wheeler v. Wilson (1884) 6 O. R. 421 303, 304 Whicher v. National Trust (1912) A. C. 377 400 White's Case (1879) 12 Ch. D. 511 795. 796 White Star Consolidated Gold Mining Co. (1883) 48 L. T. 815 .. 704, 720 White Star Hotel v. Turgeon (1915-16) 17 Que. P. R. 299.. 813, 814, 816 Whitehaven Joint Stock Bank v. Reed (1886) 54 L. T. 360 103 Whitehead v. Buffalo, etc., Co. (1859) 7 Gr. 351 130 Whitehouse's Case (1867) L. R. 3 Eq. 790 787, 790 Whitely v. Barley (1888) 21 Q. B. D. 154 450 Whitesi-de v. Bellchamber (1872) 22 C. P. 241 365 White Star Hotel Co. v. Turgeon (1915-6) 17 Que. P. R. 299 .... 810 Whitfield V. S. E. Ry. Co. (1858) E. B. & E. 122 149 Whitley v. Challis (1892) 1 Ch. 64 (A. C.) 416 Whittier v. MacLennan ( 1856) 13 U. C. R. 638 229 Wiarton, etc., Co., Re (1904) 3 O. W. R. 393 722 Wiarton Beet Root Sugar, Freeman's Case (1906) 12 0. L. R. 149 159, 329, 683, 784 Wiarton Beet Root Sugar Co., Jarvis's Case (1905) 5 0. W. R. 542 246, 804 Wiarton Beet Root Sugar Co., Kydd's Case (1905) 6 O-W.R. 590. . 852 Wiarton Beet Root Sugar Co., Re., Alexander McNeill's Case (1905) 10 O. L. R. 219 158, 160, 238, 249, 818, 819 Wickson Co., Ltd. v. Dominion Creosoting Co., Ltd. (1917) 55 S. C. R. 303 398 Wilberforce Educational Institute v. Holden (1884) 17 0. R. 439 549 Wllkie V. Jellett (1895) 2 Terr. L. R. 33 320 Will V. United Lanket Plantation Company (1912) 2 Ch. 571... 258 Willett Martin Co. v. Full (1915) 24 D. L. R. 672 98 Willey V. Joseph Stock & Co. (1912) 2 Ch. 134 404 Williams, In re (1902) 4 0. L. R. 501 777 Williams v. Crawford Tug Co. (1907) 16 O. L. R. 245... 104, 121, 145 TABLE OF CASES. Ixxix Wil— 'Woo P^GE Williams v. Dominion Trust Co. (1916) 31 D. L. R. 786. .764, 768, 773 Williams v. Graham (1916) 34 W. L. R. 855 511 Willmot V. London Celluloid Co. (1887) 34 Ch. D. 147 844 Wills V. Ford and Doucette (1915) 35 O. L. R. 126 (App. Div.) . . 344 Wills V. Murray, 4 Ex. 843 517, 527 Wilson, Re (1873) L. R. 8 Eq. 240 782 Wilson V. .^tna Life Assurance Co. (1879) 8 P. R. 131 551 Wilson V. B. C. Refining Co. (1915) 22 D. L. R. 634. .170, 171, 264, 342 Wilson V. Bury (1885) 5 Q. B. D. 518 467 Wilson V. Ginty (1878-9) 3 A. R. 124 157, 249, 438 Wilson V. Hotchkiss (1901) 2 0. L. R. 261, affirmed sub nom. T. Milburn v. Wilson (1901) 31 S. C. R. 481 217 Wilson V. Miers (1861) IC C. B. N. S. 348 527 Wilson V. West Hartlepool (1864) 34 Beav. 187 141 Wilton V. Manitoba, etc., Ore Co. (1915) 25 D. L. R. 243 148 Wiltshire Iron Co. v. Great Western Ry. Co. (1871) L. R. 6 Q. B. 101. 776 768 Winborn & Co., Re (1905) 1 Ch. 413 764 Winding-up Act and Alberta Loan, etc.. Co. (1917) 32 D. L. R. 795 859 Winding-up Act and Canadian Tractor, etc., Co.. Re (1914-15) 7 W. W. R. 562 237, 240 Winding-up Act and Canadian Tractor, etc., Co., Re. W. B. Hooker's Case (1914-15) 7 W. W. R. 562 240, 247 Winding-up Act and Canadian Tractor, etc., Co., Re, Svaigher's Case (1914-15) 7 W. W. R. 562 239 Winding-up Act, The, Re. The Consumer's Coal Co., Ltd. (1917) 2 W. W. R. 143 705 Winding-up Act and Summerside Electric, Re (1908) 5 E. L. R. 129 403 Winding-up Ordinance and Timbers, Ltd., Re (1917) 35 D. L. R. 431 701 Windsor Hotel v. Murray, 1 L. N. 75 69 Windsor, Ltd. v. Windsor, 17 B. C. R. 105, 3 D. L. R. 456 487 Wingate v. Enniskillen Ore Refining Co. (1864) 14 C. P. 379 128 Winnipeg Hedge and Wire Fence Co., Ltd. (1912) 1 D. L. R. 316; 22 Man. L. R. 83. .109, 111, 127. 157. 168, 305, 330, 683, 784, 791, 798 Winnipeg and Hudson's Bay Ry. Co. v. Mann (1890) 7 Man. L. R. 81 372, 378 Winnipeg & Western Development Co.. Re (1915-16) 33 W. L. R. 749 738. 743 Withernsea Brickworks, Re (1880) 16 Ch. D. 337 746 Withnell v. Gartham (1795) 6 T. R. 388 490 Wolverhampton, etc.. Co. v. Hawkford (1861) 11 C. B. N. S. 456. 559 Woivorton v. Black Diamond Oil Fields (1915) 8 Alta. L. R. 283. 334. 335, 336 Wood V. Grand Valley (1912) 27 O. L. R. 5.'.6; (1915) 51 S. C. R. 283 147 Wood V. Odessa, etc.. Co. (1889) 42 Ch. D. 636 419 Wood V. Ontario (1874) 24 U. C. C. P. 334 439 Wood V. Reesor (1895) 22 A. R. 57 33, 544 Wood V. Tait (1806) 5 B. & P. 247 132 L\X\ TABLE OF CASES. Woo— Zoo TAOE Woodburn Sons Co.. Ltd., Re (1910) Que. 11 P. R. 393 755 Woodruff V. Harris (1850) 11 U. C. R. 490 313 Woolmer. Ex p. (1851) 5 De G. & Sm. 117 730 Worcester, etc., Ry. Co., Re (1850) 3 De G. & Sm. 189 730 Wragg. Limited. In re (1897) 1 Ch. 796 42, 156, 157, 793 Wrexham Mold and Connah's Ry. (1899) 1 Ch. 440 374 Wright's Case (1871) L. R. 7 Ch. 56 795 Wright's Case (1871) L. R. 12 Eq. 331 517 Wright V. Harton (1887) 12 App. Cas. 371 397 Wyatt V. Metropolitan Board of Works (1861) 11 C. B. N. S. 744. 213 Wynne's Case, L. R. 8 Ch. 1002 593 Yate Collieries, Re (1883) W. N. 171 685 Yelland's Case (1852) 5 De G. & S. 395 788 Yellowhead Pass, etc., Co. (1917) 2 W. W. R. 295 508 Yenidje Tobacco Co. (1917) 86 L. J. Ch. 1; (1916) 2 Ch. 426.701, 702 Yolland Husson & Co., Ltd. (1908) 1 Ch. 152 398 York County Loan and Savings Co. (1908) 11 0. W. R. 507 17 York, etc., Ry. v. Ritchie, 40 Me. 425 299 Yorkshire Woolcombers' Association (1903) 2 Ch. 284 390 Young V. Bank of Nova Scotia (1915) 34 O. L. R. 176 105, 126 Young V. Consumers' Cordage Co. (1896) 9 Que. S. C. 471 ..144. 487 Young V. David Payne & Co. (1904) 2 Ch. 608 361, 364, 368 Young V. McxNTider (1895) 25 S. C. R. 272 382 Young V. Naval, etc., Society (1905) 1 K. B. 687 462, 869 Young V. Smith (1915) 21 D. L. R. 97; 8 A. L. R. 256 192 Yuill V. Greymouth & Point Elizabeth Ry. and Coal Co. (1904) 1 Ch. 32 478,490 Zoological Society of Ontario, Re, Cox's Case (1889) 10 P. R. 434. 230 Zoological Acclimatization Society, Re, 17 0. R. 331 10 Zoological, etc., Society of Ontario, Re (1889) 16 A. R. 543 . .785, 786 Zoological, etc., Society, Re; Re Piper, Ex p. Boswell & Gait (unreported) 831 THE DOMINION COMPANIES ACT E. S. C. (1906), Chapter 79 and Amending Acts. An Act Respecting Companies. SHOET TITLE. 1. This Act may be cited as the Companies Act. Short title. The principal Acts of the Dominion of Canada re- lating generally to companies and company law are, — 1. The Companies Act, R. S. C. (1906), c. 79, as amended by 7-8 Ed. VII. c. 16; 4-5 Geo. V. c. 23 (The Companies Act Amendment Act, 1914) ; 7-8 Geo. V. c. 25 (The Companies Act Amendment Act, 1917) ; and 8-9 Geo. V. cc. 13 and 14. 2. The Winding-up Act, R. S. C. (1906) c. 144. Amended 6-7 Ed. VII. (1907) c. 51; 7-8 Ed. VIL cc. 10, 74, 75; 9-10 Ed. VII. c. 62; (1912) c. 24; (1915) c. 21; (1916) c. 5. Separate legislation has been enacted by the Parlia- ment of Canada in regard to railways, banks, insur- ance, loan and trust companies, as follows : — Banks.— B. S. C. (1906) c. 29. Amended (1908) c. 7; (1911) c. 4; (1912) c. 5; (1913) c. 9 c.; (1914) 2nd sess. c. 3; (1915) c. 1; (1916) c. 10. Railways.— (1919) c. 68. Insurance companies.— R. S. C. (1906) c. 34; (1908) c. 69; (1910) c. 32 c; (1915) c. 5; (1916) c. 8; (1917) c. 29c; (1919) c. 57. Loan companies. — (1914) c. 40. Trust companies. — (1914) c. 55. These and other companies respecting which special legislation has been passed, are governed primarily by their special Act of Incorporation, and, secondly, by the general statutes above mentioned when not incon- sistent with the terms of the special Act. D.C.A. — 1 >) DOMINION COMPANIES ACT, Sect. 1. Dominion companies may be incorporated in two wavs, — 1. By Letters Patent, in which case they are gov- erned bv Part I. of this Act. 2. By special Act of Incorporation, in which case they are governed by such special Act supplemented (where not inconsistent) by Part II. of this Act. Since June 12th, 1914, loan companies can not be incorporated by letters patent under Part III. of the Companies Act : Loan Companies Act, 1914, 4-5 Geo. V. c. 40, s. 4 ; and from the same date tlie incorporation of a trust company by letters patent under Part I. of the Companies Act is forbidden: Trust Companies Act, 1914, 4-5 Geo. V. c. 55, s. 4. The last mentioned Act further provides (s. 3, s.-s. 2) that the provisions of Part II. of the Companies Act shall not apply to any trust company which may be thereafter incorporated by Act of the Parliament of Canada. PAET I. New com- panies. Old com- jKinies. JOINT STOCK COMj^ANIES. Application of Part. 2. This Part applies to, — (a) all companies incorporated under it ; (h) all companies incorporated under tho Companies Act, chapter one hundred and nineteen of Tli,e Revised Stat- utes of Canada, or to which that Act applied before the fifteenth day of May, one thousand nine hundred and two, excepting loan companies. 2 E. VII., c. 15, s. 3. (c) all companies incorporated under The Companies Act, 1920. (7-8 Ed. VII., 1908, c. 16, s. 1). Except as provided in Parts IV. and V., this Act does not relate to Foreign Corporations, Provincial- Companies, Banks, Railway or Insurance Companies. Part II. applies to companies incorporated by spe- cial Act, except trust companies incorporated after June 12th, 1914. Part III. applies to loan companies. By 4-5 Geo. V. c. 40, s. 4, it is enacted that 'No letters patent incor- INTERPRETATION. 6 porating a loan company shall after the passing of this Sect. 2. Act be issued under the provisions of Part III. of the Companies Act, chapter 79, the Revised Statutes of Canada, 1906.' Interpretation. 3. In this Part, and in all letters patent and supplementary Definitions letters patent issued under it, unless the context otherwise requires, — "(a) ' the company ' or '^ a company ' means any company to < Company.' which this Part applies ; ( & ) ' the undertaking ' means the business of every kind ' Under- which the company is authorized to carry on; taliing. (c) 'real estate' or 'land' includes messuages, lands, tene- 'Real es- ments, and hereditaments of any tenure, and all immov- *^'^t^-' able property of any kind ; (d) 'shareholder' means every subscriber to or holder of ' Share- stock in the company, and includes the personal repre- ° • sentatives of the shareholder; (e) 'manager' includes the cashier and his secretary; 'Manager." (/) ' court ' means in Ontario, the Supreme Court of ' Court' Ontario; in Quebec, the Superior Court in and for that province; in Nova Scotia, New Brunswick, British Columbia and Prince Edward Island, the Supreme Court in and for each of those provinces, respectively ; in Manitoba, the Court of King's Bench for Manitoba; in the provinces of Saskatchewan and Alberta, a superior court; and in the Yukon Territory, the Territorial Court (7-8 Geo. v. c. 25, s. 2.) (g) 'judge' means in the said respective provinces and 'Judge.' Territory a judge of the said courts respectively. 2 E. VII., c. 15, ss. 3,53 and 79. (h) ' flebonture ' inrlurles bonds and debenture stock. " Deben- (7-8 Geo. V. c. 25, s. 2). ^"'■«-" Supplementary to the above are to be read section interpreta- 30 and sub-section (i^) of section 31 of the Interpreta- ^'°° ^*- tion Act (Canada), R. S. C. (1906) c. 1, which are as follows : — Section 30. In every Act, unless the contrary inten- tion appears, — Words making any association or number of per- sons a corporation or body politic and corporate shall (a) vest in such corporation power to sue and be sued, contract and be contracted with by their corporate name, to have a common seal, to alter or change the DOMINION COMPANIES ACT. Sect. 3. same at their pleasure, to have perpetual succession, ~ to acquire and hold personal property or movables for the puriioses for which the corporation is constituted, and to alienate the same at pleasure; and, (b) vest in a majority of the members of the corporation the power to bind the others by their acts; and, (c) exempt indi- vidual members of the corporation from personal lia- bility for its debts or obligations or acts if they do not violate the provisions of the Act incorporating them. 2. No corporation shall be deemed to be authorized to carry on the business of banking unless such power is expressly conferred upon it by the Act creating such corporation. Section 31. In every Act, unless a contrary inten- tion appears, — (g) If a power is conferred to make any rules, re- gulations or by-laws, the power shall be construed as including a power, exercisable in the like manner and subject to the like consent and conditions, if any, to rescind, revoke, amend or vary the rules, regulations or by-laws and make others. In addition to the foregoing definitions set forth in the Act itself, the following definitions, explanations and interpretations of words and phrases may use- fully be considered : Articles of Association. In England, Articles of Association are similar to by-laws under this Act, and are for the regulation and management of the corporation. Allotment. Interpretation of — necessity for. See Nelson v. Pel- latt (1902), 4 O.L. R. 481. After Four Days' Notice. See Re Arnold Chemical Co., 2 0. L. R. 671; Re Farmers Bank (1910-11) 2 0. W. N. 623; 22 0. L. R. 556. Bond. A bond of a corporation is an instrument executed under the seal of the corporation acknowledging a loan INTEEPKETATIOX. and agreeing to pay the same upon terms set forth Sect. 3. therein. A coupon bond is one that has coupons at- tached usually in the form of promissory notes to pay an amount of money equivalent to the annual or semi- annual interest on the bond. A registered bond is one whose negotiability is temporarily withdraAvn by a writing on the bond that it belongs to a specific person and by a registration to that effect at an office specified by the company. Bond Mortgage. A mortgage given by a corporation may be simi- lar to the ordinary mortgage given by an individual. But usually a corporate mortgage is made in the form of a mortgage deed of trust. Such a deed of trust is a mortgage to a trustee for bondholders, the bonds being secured by the mortgage deed of trust. The trustee may be an individual, but generally is a trust company. By-law. A by-law is a permanent rule of action in accord- ance ^vith which the corporate affairs are to be con- ducted. A by-law differs from a resolution in that a resolution applies to a single act of the corporation, while a by-law is a permanent and continuing rule which is to be applied on all future occasions. Certificate of Stock. A certificate of stock is from one point of view a mere muniment of title like a title deed. It is not tlie stock itself but evidence of the ownership of the stock; that is to say, it is a written acknowledgment by the corporation of the interest of the stockholder; it oper- ates to transfer nothing from the corporation to the stockholder, but merely affords to the latter evidence of his rights: Iligc/ins v. Lansingh, 154 111. 301 (1895) ; Haivley v. Brumagim, 33 Cal. 394 (1867). Contributory. See Re McDonald and The Noxon Bros. Mfg. Co., 16 0. R. 3G8; Re Central Bank of Canada, Yorke's Case, 15 0. R. 625; Re Monarch Bank (1914) 32 0. L. R. 207. • DOMINION COMPANIES ACT. Sect. 3. Capital Stock. Authorized capital stock or authorized share capital is the sum lixod by the corporate charter as the amount of share capital issuable by the corporation and paid in or to be paid in by the stockholders for the prosecu- tion of the business of the corporation upon being sub- scribed for and called up : Smith v. Goldsworthy, 4 Q. B. 430; Bourne v. Freeth, 9 B. & C. 632; Cooke v. Mar- shall, 191 Pa. St. 315. Subscribed capital stock or subscribed share capital is that portion of the authorized capital stock which has been subscribed. Paid-up capital stock is that portion of the sub- scribed capital stock which has been paid in to the com- pany by the holders of shares. It represents the money or money's worth which the company actually has or has had. Corporator. A corporator, sometimes called an incorporator, is one of those to whom a charter is granted, or one of those who file a petition for incorporation under a general incorporating statute : Chase v. Lord, 77 N. Y. 1, 11 (1879) ; In re Ladij Bryan Co., 1 Sawy. 349 (1870). Corporation. A Corporation is an artificial person, a mere ab- straction of law. It is a distinct existence and entity — not a mere aggregate of the shareholders : Re Shef- field, C0C., Society, 22 Q. B. D. 476; Flitcroft's Case, 21 C. D. 535; Dartmouth College y.' Woodward (1819) 4 Wheat. 518 at 636. A Corporation is an entity, an existence, irrespec- tive of the persons who own all the stock. The fact that one person owns the stock does not make him and the corporation one and the same person: Salomon v. Salomon (1897) A. C. 22; Rielle v. Reid (1899) 26 A. R. 54; Andrews Bros. v. Youngston, 86 Fed. Rep. 585. Lindley considers companies formed under the English Companies Acts as ''Partnerships incorpor- ated by registration : ' ' Lindley, 6tli Edition, page 8. INTERPRETATIOX. Having regard to the language of Section 5 of this Sect. 3. Act, a company formed thereunder appears to be a cor- poration proper rather than an incorporated registered partnership. The recent decisions in England tend in the direction of making the Companies Acts a code by which the powers of the company, the rights of credit- ors against it, and the mutual rights and obligations of the shareholders among themselves are to be deter- mined rather than by any analogy to the equitable principles relating to partnerships. Classes of Corporations. When divided with respect to the members of cor- porations they are aggregate and sole. As regards their functions they are public such as cities and towns ; quasi-puhlic such as railway and steamship com- panies, telegraph and telephone companies, etc.; and again, private corporations are divided into ecclesias- tical and lay; and still further, lay corporations are divided into eleemosynary or charitable and civil. For the purposes of the Act companies are divided into companies with shares of a nominal or par value and those with shares of no nominal or par value (ss. 5 and 7B) ; corporations without share capital (s. 7A) ; and private companies whose letters patent restrict the transferability of their shares, limit the number of memlx'rs to fifty and prohibit any offer to the public of their sliares or debentures (s. 48C (3)). A domestic corporation is one that has been organ- ized under the laws of the State referred to. A foreign corporation is one that has befen organized under the laws of another State or of a foreign government. Charter. A Ciiarter is the instrument which creates the cor- poration. A Ciiarter is special where a special Act. of the Legislature creates the corporation. A Charter is under the general Act when it consists of a certificate of incorporation issued in accordance with a general Act of Parliament allowing corporations to be formed in that manner. A company incorporated under the 8 DOMINION COMPANIES ACT. Sect. 3. general law is governed not only by its Charter, but by its by-laws and by the general Statutes of the State by which the incorporation is granted: See People v. Chicago Gas Co., 130 111. 268. Divisible Profits. Divisible Profits — Divisible Surplus : Baur v. Aetna Life Ins. Co., 20 0. R. 6. Debenture. The W' ord ' ' Debenture ' ' has no definite legal mean- ing except that it always means a debt. It may be ap- plied to any promise or security of the company to pay money. It may be a mere promise to pay or a covenant under seal to pay or a mortgage or charge under the seal of the company. The term as used in the Act includes bonds and debenture stock (s. 3 (h)). FuUy Paid and Non-assessable. See Kettle River Mines v. Bleasdell, 7 B'. C. R. 507. Flotation. Flotation of a property means a sale thereof at a profit to a substantial company. Founders' Shares. Founders' Shares are shares which take the profits after certain dividends are paid on the other shares. They are issued to the founders or promoters of the enterprise. They are unknown in Canada. Re Netv Transvaal Co. (1896) 2 Ch. 750. Incorporators. The State creates the corporation upon the applica- tion of individuals who are called incorporators. The incorporators then organize the corporation. After incorporation is completed and a permanent board of directors is elected the functions of tlie incorporators cease. In Trust. See Duggan v. London and Canadian Loan and Agency Co., 19 0. R. 272 ; 18 A. R. 305 ; 20 S. C. R. 481 ; Hart V. Ont. Express, Kirk & Marling' s Case, 24 0. R. 340 ; Raphael v. McFarlane, 18 S. C. R. 183. INTERPEETATION. Just and Equitable. Sect. 3. See Re Florida, 9 B. C. E. 108. Labourers. See Welsh v. Ellis, 22 A. R. 255. Memorandum of Association. The memorandum of association of a company in- corporated with memorandum and articles of asso- ciation is similar to the Canadian Letters Patent or Charter in that it defines i\\Q scope, objects and powers of the corporation. Officers of the Corporation. Canada Atlantic Railway Company v. Moxley, 15 S. C. R. 145. See also Poivell-Rees v. Anglo-Canadian (1912) 26 0. L. R. 490; 5 D. L. R. 818. Proposed to be Incorporated. In re London Speaker Printing Co., Pearce's Case, 16 A. R. 508. Powers Express and Implied. Express powers are those which are expressly specified in the charter or the statute under which the corporation was incorporated. Implied powers of a corporation are those which naturally arise from the nature of the business or whicli indopciidciitly of express (enactment are ascribed to it bv law. Property. See Re Kingston Arbitration (1902)" 3 0. L. R. 637. Proxy. Proxy means any person representing an absent shareholder and duly authorized in accordance with the by-laws to act for him at a meeting of shareholders. The term is also applied to the document authorizing the person representing an absent shareholder so to act. Share. "A share of stock may be defined as ;i ri,i!,-ht which its owner has in the imniagement, pi'ofits and ultimate 10 DOMINION COMPANIES ACT. Sect. 3. assets of the corporation. By the Court of Appeals in New York it is said that 'the right which a share- hohler in a corporation has, by reason of his owiier- sliip of shares, is a right to participate according to the amount of his stock in the surplus profits of the cor- poration on a division, and ultimately, on its dissolu- tion, in the assets remaining after the payment of its debts' " : Plimpton v. Bigelow, 93 N.Y. 592, 599 (1883) ; Cook on Corporations, 7th ed., vol. 1, para. 12. Scrip. In England scrip is a written acknowledgment by a corporation that the holder will be entitled to certain shares of stock and a certificate therefor when the un- paid instalments on such shares are all paid in. It is a negotiable instrument: Goodivin v. Roharts (1876), 1 App. Cas. 476. Securities. The word '' securities " means bonds, certificates of stock and other evidences of debt or of property: Thaijer v. Nathan, 17 Tex. Cir. App. 382 (1897). Servants. See Welsh v. Ellis, 22 A. R. 255. Shareholder. Re Zoolof/ical and Acclimatization Society of On- tario, 17 0. E. 331. Hendrie v. Grand Trunk Ry. 2 0. R. 441. Stock Ledger. The stock ledger contains a statement of how much stock the past and present stockliolders have owned or now own: Craig v. Hesperia, 113 Cal. 7 (1896). Transfer Book. The transfer book is for the purpose of keeping a record of transfers of stock. The entries in it corres- pond to the transfers on the back of the cancelled cer- tificates of stock. The entries in the transfer book are generally made by a clerk as attorney in fact for the transferor. The form of transfer on the back of the certificate contains such a power of attorney. PRELIMINARIES. 11 Underwriting. Sect. 3. Underwriting means an agreement before the shares are brought before the public that in the event of the public not taking all the shares or the number mentioned in the agreement, the underwriter will take the shares which the public do not take: Re Licensed Victuallers' Assoc. (1889), L. R. 12 Ch. D. 1. Preliminaries. 4. The provisions of this Part relating to matters prelim- Are direc- inary to the issue of the letters patent or supplementary letters t^^y only, patent shall be deemed directory only, and no letters patent or supplementary letters patent issued under this Part shall be held void or voidable on account of any irregularity in respect of any matter preliminary to the issue of the letters patent or supplementary letters patent. 2 E. YIL, c. 15, s. 4. Compare the Imperial Companies Act, 1908, s. 17. Pn.-iimin- The Imperial Act is stronger in its terms tlian the ^"^^' Canadian Act so that the cases decided under the former are to be applied with caution in construing this section. In conjunction with this section there is to be read section 111 of this Act : ''Except in any proceeding by scire facias or otherwise for the purpose of rescinding or annulling letters patent or supplementary letters patent issued under this Part, sucli letters patent or supplementary letters patent or any exemplification or copy thereof, shall be conclusive proof of every matter and thing tlierein set forth." Sections 4 and 111 establish two propositions : First: The validity of the charter of a company in- corporated under this Act cannot under any circum- stances be collaterally attacked or ([uestioned in any action brought by or against the company. The vali- dity of tiie charter can be questioned only in an action directly and specially brought for that purpose. Second: In consequence of the provisions of sec- tion 4 a charter granted under this Act cannot be ques- tioned even in an action specially brought for that pur- pose for mere irregularity in any [jroceeding prelimi- narv to the granting of the charter. IL' DOMINION COMPANIES ACT. Sect. 4. Under the provisions of this Act it is submitted that no ])rivate person can institute a suit to dedare a forfeiture of a charter but that any such action must be taken in tlie name of the Attorney-General or Minister of Justice upon leave obtained for that purpose. Furtlier, in consequence of the provisions of Section 111 above quoted, no one will be allowed to assert that the corporation is invalid or illegal until after such a result has been decreed by a Court in an appropriate proceeding for that purpose. Apart from the provisions of this section and of section 111, there is apparently no general rule of law preventing any party from questioning the legal exist- ence of a corporation by way of collateral attack. See Grant on Corporations 39. Where a company was incorporated under an On- tario Act containing no provision similar to the above, it was held to be open to the defendants to show that the corporate character had never been obtained in consequence of the non-performance of conditions plainly required as precedent to the right to acquire corporate status : Hamilton and FlamhorougJi Road Co. V. Totvnsend (1887) 13 A. R. 534. This holding was on the ground that certain of the petitioners for incorporation were infants; but under the Imperial Act containing provisions similar to those of this Act it has been held that the incorporation was not rendered invalid by the fact that one of the sub- scribers was an infant : Nassau Phosphates Co., 2 Ch. D. 610; Laxon S Co. (1892), 3 Ch. 555. Mere irregularities in matters of machinery are covered by this section and in regard to them the certificate is absolutely conclusive and cannot be at- tacked even by the Crown. As examples see Peel's Case, L. R. 2 Ch. 074; Oakcs v. Turquand, 1867, L. R. 2 H. L. 325; Glover v. Giles, 18 Ch. D. 173, at 180. But the public official, Avhether Registrar, Secretary of State or Provincial Secretary acting under the Companies Act, cannot by the granting of letters patent create a jurisdiction in himself so as to enable a com- pany to which the Act has no application to be incor- PRELIMINARIES. 13 porated. As under this Act it is a condition precedent Sect. 4. that the company shall consist of five members as in- corporators, if it consists of only three or four the officers cannot by issuing the charter incorporate the company: Re National Debenture and Assets Corpora- tion (1891), 2 Ch. 505; see also observations of Lord l)avey in Salomon v. Salomon (1897) A. C, page 55. The American rule is similar and is stated in Cook on Corporations, 5th ed., section 637, as follows: — ''If there is a law authorizing incorporation and a com- pany has attempted to organize under it and has acted as a corporation it is a de facto corporation and its de jure existence can be questioned only by the State :" Independent Order v. United Order, 94 Wis. 234 (1896) ; Toledo R. R. v. Connecticut Trust Co., 95 Fed. Eep. 497, 508 (1899). See also Machen, Sections 268- 270. The principal grounds upon which the validity of incorporation has been questioned are : — (a) That the necessary number of incorporators having a proper status within the terms of the Act have not signed the petition for incorporation. (b) That the purposes for which the corporation is organized are wholly outside the Act under which in- corporation has been sought. (c) Fraud or misrepresentation in the application for incorporation. (d) Illegality in the purpose for which the corpora- tion is organized. (e) Irregularity in respect to some matter or matters preliminary to the issue of tlie letters patent, such as insufficiency or absence of a preliminary notice prescribed by the Act. Note that ground (e) is eliminated by this section. The following cases afford illustrations of the principles on which letters patent have been set aside : La Banque d'llochelafja v. Murray, 15 A. C. 414; Do- minion Salvage and IVrecJcing Co. v. Attorney -General of Canada, 21 S. C. K. 72; Hardy v. Pickerel River Co., 29S. C. R. 211. (Refused). 14 DOMINION COMPANIES ACT. Sect. 4. Where the Grown is given statutory autliority to revoke letters patent the bringing of an action by the Attornej^-General i'or the forfeiture of letters patent does not clothe the Court with jurisdiction to restrain the Crown from the exercise of its power of cancella- tion : AiioDieii-General v. Toronto Junction Recreation Club, 8 0. L. k 440. Section 26 of the Ontario Judicature Act of 1897, conferred upon the High Court of Justice for Ontario ''the like jurisdiction and powers as by the laws of England were on the 4th day of March, 1837, possessed by the Court of Chancery in England, " . . . ss. 8, '*to repeal and avoid letters patent issued erroneously, or by mistake, or improvidently or through fraud." See the notes in Holmested & Langton's Judicature Act, 4th ed., page 18. Formation of New Companies. Companits ' 5. (1) The Secretary of State of Canada may, by letters ineorporated patent under his seal of office, grant a charter to any number for certain q| persons, not less than five, who apply therefor, constituting such persons, and others who have become subscribers to the memorandum of agreement hereinafter mentioned and who thereafter become shareholders in the company thereby created, a body corporate and politic, for any of the purposes or objects to which the legislative authority of the Parliament of Canada Exceptions, extends, except the construction and working of railways or of telegraph or telephone lines, the business of insurance, the busi- ness of a trust company, the business of a loan company and the Proviso. business of banking and the issue of paper money: Provided, however, that nothing in this part of the Act shall be construed Inter- ^q prevent companies incorporated thereunder from exchanging oontracts. reciprocal contracts of indemnity against loss by fire or other- wise, under the plan known as inter-insurance. 7-8 Geo. V. c. 25. s. 3. No power to 2. Nothing in this Part shall be construed to authorize any issue paper companv to issue any note payable to the bearer thereof or any nionpv or i ^ j r j •/ for banking, promissory note intended to be circulated as money or as the note of a bank or to engage in the business of banking or insur- ance. 2 E. YTT., c. 15, ss. 5 and 24. Note regarding the power to incorporate companies. Power to in- The power to incorporate companies is derived both corporate -^^ ^j^^ Dominion Parliament and by the Provincial POWER TO INCORPORATE. 15 Legislatures from the British North America Act. Sect. 5. These two authorities (Dominion and Provincial) be- tween them possess complete power to incorporate all companies; but grave questions arise respecting the distribution of that power between the two authorities. It has been determined with regard to the Legisla- tive powers of the Dominion to incorporate companies that such authority belongs to it by virtue of its general power over all matters not coming within the class of subjects assigned exclusively to the Legislatures of the provinces, and the only subject on this head assigned to the Provincial Legislatures being the incorporation of companies with provincial objects, it follows that the incorporation of companies for objects other than provincial falls mthin the general powers of the Parlia- ment of Canada: Citizens' Insurance Company v. Parsons, 7 App. Cas. 96; Colonial Building and Invest- ^^ ment Association v. Attorney-General of Quebec, 9 App. Cas. 157; Canadian Pacific Ry. v. Ottawa Fire Ins. Co. (1908), 39 S. C. R. at 405. From the realm of power to incorporate is first carved the exclusive power of the Provincial Legisla- tures to incorporate companies with provincial objects and the residue of the Legislative power to incorporate them remains with the Dominion Parliament. Between the two tliey exhaust the realm. The extent of the powers of companies incorporated by provincial authority was elaborately considered in the case of Canadian Pacific Railivay Company v. Ottawa Fire Insurance Co. (1908), 39 S. C. R. 405. The defendant company was incorporated under the Legis- lative authority of the Province of Ontario and had assumed to insure the property of the plaintiff in the State of Maine. The plaintiff among other claims sought a return of the insurance premiums paid by it to defendant com])any on the ground of no considera- tion, claiming that as tlie defendant company was in- cor[)orate(l by provincial legislation it was inherently subject to a constitutional limitation by which it was prohibited from making contracts to insure property outside of the province, by which it was incorporated. l(j DOMINION COMPANIES ACT. Sect. 5. The discussion turned principally on the interpreta- ~ tion of sub-section 11 of section 92 of the British North America Act which reads as follows : "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 : 11. The incorporation of companies with provincial objects." The Chief Justice in his dissenting judgment says : **The jurisdiction of the Legislature by whose authority the company respondent was brought into existence is limited as to subjects and area. The sub- jects with respect to which it can legislate are enumer- ated in Section 92 of the British North America Act, 1867, and the area of its legislative jurisdiction is con- fined to the Province of Ontario," and this view is also taken by Mr. Justice Davies, who adds as a rider : '*It by no means follows that from this, however, that everything the company does beyond the area of the province within w^hich it is limited to do business, in furtherance of or ancillary or incidental to its main objects or purposes, is necessarily ultra vires." He adds that the objects and purposes of the company must be confined to the province, but necessary, sub- sidiary and incidental things may be done outside of the province strictly in furtherance of those objects. Mr. Justice Duff holds that the word ''objects" in s. 92, No. 11, is used to denote the })urposes for which a company is established and that the main controversy turns on the meaning of the word ' ' provincial. ' ' The characteristic ''provincial" which is to mark the objects of such a company is not necessarily, he thinks, to be found in every act or transaction of the company. The question is, would the business of a company constituted with such objects, regarded as a whole, fairly come within the description "provincial." If taken as a whole, a given undertaking would fall within the description "provincial," he does not know on what ground one could challenge the com- petence of the Legislature to constitute a company POWER TO IXCOEPORATE. 17 having such an undertaking, or to invest its creature Sect. 5, with such capacities and faculties as it should see fit, not of course incompatible mth the character of its undertaking as a provincial undertaking. After referring to the two decisions of the Privy- Council which have touched upon this question of the respective jurisdictions of the Province and the Do- minions, viz.. Citizens' Insurance Co. v. Parsons, 7 App. Cas. 96, and Colonial Building Association v. At- torney-General, 9 App. Cas. 157, he says, at p. 466: *'It is, however, important not to attribute to the language of the Judicial Committee a meaning more far reaching than that which it fairly conveys. And I do not think we can deduce from the judgment any broader principle than this — that a company autho- rized by its constitution to establish itself in any or all of the provinces of the Dominion and in any of those . provinces to carry on the whole of its business or as much of it as it shall see fit, is not a company of the class to which the authority of the Provincial Legisla- tures, under the sub-section referred to, (No. 11), can be held to extend. The company whose Act of incor- poration was under consideration, was, as we have seen, endowed with just such powers, and it was with reference to those powers that the expressions were used which I have quoted from the judgment. These expressions must, however, be read and construed with reference to that circumstance. We are not to seize upon the statement that only companies incorporated by the Parliament of Canada have the capacity to carry on their business througliout the Dominion, detach it from its context, from the subject matter under discussion, and imputing to it the broadest sig- nification wliich it will bear, give effect to it in that sense as expounding '*a binding rule of law." Mr. Justice Maclennan and Mr. Justice Idington concur in the result arrived at by Mr. Justice Duff, ex- pressing their opinions more unreservedly. In York County Loan and Savings Co. (1908), 11 0. W. R. 507, the claim of certain Nova Scotia share- D.C.A. 2 18 DOMINION COMPANIES ACT. Sect. 5. holdors was tliat ui)(>ii tlio proper construction of "section 92 of the British North America Act, No. 11, the riiiht of the York County Loan and Savings Com- pany (being a company incorporated under the autho- rity of the Province of Ontario), to transact its func- tional business was territorially limited to the Prov- ince of Ontario and that the acts done by that company in the Province of Nova Scotia were ultra vires of the charter powers of the company. After discussing the earlier cases, the learned Referee, Mr. Kappele, pro- ceeds at p. 516: "In other Avords, while a company incorporated by the province to carry on business, the subject mat- ter of which is within the jurisdiction of tlie prov- ince, is only a corporation as of right in the province itself, as a matter of comity, it is a corporation and may do business wherever it is received by any other prov- ince, state or country. On principle, it does not seem that, taking the strictest view of the eifect of the find- ing of the Privy Council in the cases so much discussed, there is anything to limit the rights which by comity a provincial company may exercise. The province in- corporates a company to carry on a certain kind of business. It cannot by express grant in its charter give it the right to carry on that business anywhere outside of the province, but it can clothe it with all the powers of a legally created artificial person, which by comity but not by right may do business wherever the law of the province, state or country into which it seeks to go does not exclude it." **I am also of the opinion that the province has an inherent right incidental to its sovereignty, as con- ferred upon it by Section 92 of the British North Am- erica Act, to incorporate companies with the powers and within the limits of its sovereignty. The incor- poration of a company is, after all, not so much the exercise of a power as the right of a sovereign state to create instruments in the shape of artificial persons to carry on such commercial operations as its individuals and citizens have a right to carry on. What its citizens can do, and over whicli the province has control, it may POWEE TO INCOEPOKATE. 19 create and authorize an artificial person to do, and the Sect. 5. powers of that artificial person are not territorially 7~ limited by anything contained in Section 92 of the B. N. A. Act conferring sovereign rights on the prov- ince. ' ' '*In this view I think the province can create any company for commercial or business purposes, which are all in principle of a local or private nature and relate to property and civil rights in the province. What this artificial person when created by the prov- ince may do opens up other considerations. Such powers as it is given as are within the exclusive juris- diction of the province it can clearly exercise. It may for other reasons and other purposes in its operations become subject to the laws of the Dominion, but it even then would remain a provincial company'' . . . ''Every company has the right which its charter gives it as well as those rights which comity confers and recognizes, and a company legalh^ incorporated and not limited as to territorv bv its own charter receives recognition as a matter of comity outside of its sove- reign state." . . . "In the result I do not think that the acts of any companj^ that are outside of the territory of the prov- ince creating it, and which woukl otherwise be i)itra vires, are ultra vires unless the charter of the company or the statute under wiiich the company may be in- corporated, exjjressly limits its operations to a speci- fied territory. " Citizens' Insurance Company v. Parsons (1882), 7 App. Cas. 96. This was an action to recover against fire insurance companies on policies covering property and made in Ontario. By an Act of the Province of Ontario the contracts of all fire insurance companies respecting insurance in Ontario were made subject to certain con- ditions and provisoes set forth in the statute. The determination of the rights of the parties depended on the validity of this Provincial Act and its applica- bility to a Dominion company. 2^) DOMINION COMPANIES ACT. Sect. 5. "It was contended in the case of the Citizens' In- ^ snrance Company of Canada, that the company having been originally incorporated by the Parliament of the late Province of Canada, and having had its incorpora- tion and corporate rights confirmed by the Dominion Parliament, could not be affected by an Act of the On- tario Legislature. But the latter Act does not assume to interfere with the constitution or status of corpora- tions. It deals with all insurers alike, including cor- porations and companies, whatever may be their origin, whether incorporated by British authority as in the case of tlie Queen Insurance Company or by foreign or colonial authority and without touching their status, requires that if they choose to make con- tracts of insurance in Ontario relating to property in that province, such contracts shall be subject to certain conditions. It by no means follows that because the Dominion Parliament has alone the right to create a corporation to carry on business throughout the Do- minion that it alone has a right to regulate its con- tracts in each of the provinces. The authority (to in- corporate such a company) would belong to it by its general power over all matters not coming within the classes assigned exclusively to the legislatures of the provinces, and the only subject on this' head assigned to the provincial legislature being 'the incorporation of companies with provincial objects,' it follows that the incorporation of companies for objects other than provincial falls within the general powers of the Par- liament of Canada." . . . (at pp. 113 and 114). ''But it by no means follows (unless indeed the view of the learned judge is right as to the scope of the words 'the regulation of trade and commerce') that because the Dominion Parliament has alone the right to create a corporation to carry on busi- ness throughout the Dominion tliat it alone has the right to regulate its contracts in each of the provinces. Suppose the Dominion Parliament were to incorporate a company, with power, among other things, to pur- chase and hold lands throughout Canada in mortmain, it could scarcely be contended if such a company were POWER TO IXCORPORATE. 21 to carry on business in a province where a law against Sect. 5. holding land in mortmain prevailed (each province ^ having exclusive legislative power over 'property and civil rights in the province') that it could hold land in that province in contravention of the provincial legis- lation; and, if a company were incorporated for the sole purpose of purchasing and holding land in the Dominion, it might happen that it could do no business in any part of it, by reason of all the provinces having passed Mortmain Acts, though the corporation would still exist and preserve its status as a corporate body" (at p. 117). The principle of this case appears to be that while a Provincial Legislature has no power to interfere with the constitution or status of a dominion corpora- tion it may validly reg-ulate the contracts of such cor- poration made within its jurisdiction in relation to property and civil rights. Dobie V. Temporalities Board (1882), 7 App. Cas. 136. Held, that 22 Vict. c. 66 (of the Parliament of Can- ada), which created a corporation, having its corporate existence and rights in the Province of Ontario and Quebec, could not be repealed or modified by the Legis- lature of either province or by the conjoint operation of both, but only by the Parliament of the Dominion. Pleld, further, that the Quebec Act, 38 Vict. c. 64, which assumed to repeal and amend the said 22 Vict. c. 66, and (1) to destroy a corporation created by the Canadian Parliament and substitute a new one; (2) to alter materially the class of persons interested in the corporate funds, and not merely to impose conditions upon the transaction of business by the corporation within the province, was invalid. "The case of the Citizens' Ivsjirauce Companif of Canada v. Parsons comes nearest in its circumstances to the present, as in that case the appellant company was incori)orated by and derived all its statutory rights and privileges from an Act of the Province of Canada, whereas the Queen Insurance Company was incorpor- 22 DOMINION COMPANIES ACT. Sect. 5. atod under the provisions of the Britisli Joint Stock Companies Act, 7 & 8 Vict. c. 110. In both cases the validity of an Act of the Leg'islature of Ontario was impeached on the ground that its provisions were ultra vires of a provincial legislature and were not binding unless enacted by the Parliament of Canada. It was contended on behalf of the Citizen Insurance Com- pany that the statute complained of was invalid in resi)ect that it virtually repealed certain rights and privileges which they enjoyed by virtue of their Act of incorporation. That contention was rejected, and the decision in that case would be a precedent fatal to the contention of the appellant if the provisions of the Ontario Act, 39 Vict. c. 31, and the Quebec Act, 38 Vict. c. 64, were of the same or substantially the same character. But upon an examination of these two statutes it becomes at once apparent that there is a marked difference in the character of their respective enactments. The Ontario Act merely prescribed that certain conditions should attach to every policy entered into or in force for insuring property situate within the province against the risk of fire. It dealt with all corporations, companies and individuals alike who might choose to insure property in Ontario — it did not interfere with their constitution or status, but required that certiiin reasonable conditions should be held as inserted in every contract made by them. The Quebec Act, 38 Vict. c. 64, on the contrary deals with a single statutory trust and interferes directly with the con- stitution and privileges of- a corporation created by an Act of the province of Canada and having its corpor- ate existence and corporate rights in the province of Ontario as well as in the province of (Quebec. The pro- fessed object of the Act and the effect of its provisions is not to impose conditions on the dealings of the cor- poration with its funds within the province of Quebec, but to destroy, in the first place, the old corporation and create a new one, and, in the second place, to alter materially the class of persons interested in the funds of the corporation." (At pp. 148 and 149.) POWER TO INCORPORATE. 23 The Colonial Building and Investment Association Sect. 5. V. The Attorney-General of Quebec (1883-4), 9 A. C. 157. This was a proceeding to have it declared that the company which was incorporated by an Act of the Par- liament of Canada had been illegally incorporated and should be dissolved, because the statute incorporating it was ultra vires of the Parliament of Canada. In the course of its judgment the Court says : "It is asserted in the petition, and was argued in the Courts below, and at this bar, that inasmuch as the association had confined its operations to the Province of Quebec, and its business had been of a local and private nature, it followed that its objects were local and provincial, and consequently that its incorporation belonged exclu- sively to the provincial legislature. But surely the fact that the association has hitherto thought fit to confine the exercise of its powers to one province cannot affect its status or capacity as a corporation, if the Act incor- porating the association was originally within the legis- lative power of the Dominion Parliament. The com- pany was incorporated with powers to carry on its business consisting of various kinds throughout the Dominion. The Parliament of Canada could alone con- stitute a corporation witli these powers; and the fact that the exercise of them has not been co-extensive mth the grant cannot operate to repeal the Act of incor- poration, nor warrant the judgment prayed foi', viz., that the company be declared to be illegally consti- tuted." (At p. 1G5.) In the course of the judgment the Court affirms the observations made in Citizens' Insurance Company v. Parsons as to the respective powers of the Dominion and Provincial Legislatures in regard to the incorpora- tion of companies, and adds that in the ilkistration used in the case of Citizens' Insurance Company v. Parsons the object was merely to point out that a corporation could only exercise its powers subject to the law of the province whatever it miglit be in this respect. The points of this case are three : 24 DOMINION COMPANIES ACT. Sect. 5. (1) AllirinaiR'o of ('i( loots' hisiiravcc. Company v. ~ Parsons as to tJie power of the Dominion to create a corporation with power to carry on business through- out all Canada. (2) The fact that such a corporation confines the exercise of its powers to one province and to local and provincial objects does not affect its status as a cor- poration or operate to render its original incorporation illegal as being ultra vires of the Parliament of Canada. (3) In Canadian Pacific Raihvay v. Ottaiva Fire (1906-8), 39 S. C. R. 405, Mr. Justice Duff, after discus- sing this decision, says : ^'I do not think we can deduce from the judgment any broader principle than this — that a company authorized by its constitution to estab- lish itself in any or all of the provinces of the Domin- ion, and in any of those provinces to carry on the whole of its business or as much of it as it shall see fit, is not a company of the class to which the authority of the provincial legislatures under the sub-section referred to, (No. 11), can be held to extend." (At p. 466). Corporation of the City of Toronto v. Bell Tele- phone Company of Canada (1905), A. C. 52. The Bell Telephone Company claimed the right under their incorporating Acts, which were passed by the Dominion Legislature, to enter upon the streets and highways of the corporation of Toronto and to con- struct conduits or cables thereunder or to erect poles and affix wires thereto upon or along such streets or highways without the consent of the city. The judgment is delivered by Lord Macnaghten: " The British North America Act, 1867, in the dis- tribution of legislative powers between the Dominion Parliament and provincial legislatures, expressly excepts from the class of 'local works and undertak- ings' assigned to provincial legislatures 'lines of steam or other ships, railways, canals, telephones, and other works and undertakings connecting the province with any other or others of the provinces or extending be- yond the limits of the province' : sec. 92, sub-sec, 10 (a). POWER TO IXCORPORATE. 25 Section 91 confers on the Parliament of Canada ex- Sect. 5. elusive legislative authority over all classes of subjects so expressly excepted. It can hardly be disputed that a teleiDhone company, the objects of which as defined by its Act of incorporation contemplate extension be- yond the limits of one province, is just as much within the express exception as a telegraph company with like powers of extension. It would seem to follow that the Bell Telephone Company acquired from the legis- lature of Canada all that was necessary to enable it to carry on its business, in every province of the Do- minion, and that no jjrovincial legislature w^as or is competent to interfere with its operations, as autho- rized by the Parliament of Canada." (At pp. 56, 57.) The Court also afiirmed the view expressed in Colonial Building v. Attorney -General of Quebec. John Deere Plow Co. v. Wharton (1914), 18 D. L. R. 353; (1915) A. C. 330; 84 L. J. P. C. 64. * * The power of legislating with reference to the in- corporation of companies wdth other than provincial objects must belong exclusively to the Dominion Parlia- ment, for the matter is one 'not coming witliin the classes of subjects' 'assigned exclusively to the legis- lature of the provinces,' within the meaning of the initial words of sec. 91, and may be properly regarded as a matter affecting the Dominion generally and covered by the expression 'the peace, order and good government of Canada. ' ' ' "Their Lordships find themselves in agreement with the interpretation put by the Judicial Committee in Citizens' Insurance Co. v. Parsons, 7 A. C. at pp. 112, 113, on head 2 of sec. 91, which confers exclusive power on the Dominion Parliament to make laws regulating trade. This head must, like the expression, ' property and civil rights in the province ' in sec. 92, receive a limited interpretation. But they tliink that the power to regulate trade and commerce at all events enables the Parliament of Canada to prescribe to what extent the powers of companies the objects of which extend to the entire Dominion should he exercisable, lH) dominion companies act. Sect. 5. and what limitations should be placed on such powers." (18 D. L. R. 359, 360). See also Attorney-General for Ontario v. Attorney- General for Canada. (The Companies Case) (1916) 85 L. J. P. C. 127; (1916) 1 A. C. 598; (1916) 26 D. L. R. 293. Attorney-General for Canada v. Attorneys-General for Alberta, Manitoba, etc. (The Insurance Case) (1916) 85 L. J. P. C. 124; (1916) 1 A. C. 588; (1916) 26 D. L. R. 288. ''Where a company is incorporated to carry on the business of insurance throughout Canada, and desires to possess rights and powers to that effect operative apart from further authority, the Dominion Govern- ment can incorporate it with such rights and powers, to the full extent explained by the decision in the case of the John Deere Ploiv Co., 18 D. L. R. 353, (1915) A. C. 330." (26D. L. R. 292). After referring to and epitomizing the more im- portant cases it will be well to state briefly the prin- ciples. Principles. Principles. 1. The Dominion Parliament possesses the exclu- sive jurisdiction to incorporate companies with powers to carry on business throughout the Dominion. The incorporation of companies with objects other than provincial falls within the general powers of the Par- liament of Canada, that is to say, the power is grounded upon the opening initiatory clause of section 91 of the British North America Act. 2. The Dominion Parliament cannot empower com- panies incorporated by it to carry on business in any province except subject to and consistently with the laws of that province. 3. But if the business of the company is such that power to make laws in relation to it belongs exclusively to the Dominion Parliament, then the powers and au- thority conferred on the company by the Dominion Par- POWER TO INCORPORATE. 27 liament cannot be lessened by provincial authority and Sect. 5. are superior to provincial authority. 4. The fact that the company incorporated under an act of the Dominion Parliament with power to carry on its business throughout the Dominion confines the exercise of its powers to one province cannot affect its status or capacity as a corporation. 5. A company incorporated under Dominion legisla- tion can exercise no power which its creator could not directly exercise. Its acts of incorporation may con- fer corporate capacity merely and powers in relation to matters within the legislative competence of the Federal Parliament. 6. The status and corporate capacity of a provincial company are determined hj its act of incorporation. Its powers must come from that legislature which has jurisdiction over the subject matter of such powers. The character of the actual powers and rights whicli the provincial government can bestow is limited to powers and rights exercisable within the province. But a company incorporated by letters patent under the Ontario Act has, in addition, capacity to accept extra-provincial powers and rights : Bonanza Creek, (&c.,Co. V. The King (1916) 1 A. C. 566. As to com- panies incorporated by memorandum and articles, see the same case at p. 584, and Weijbuni Toirnsite v. Hons- berf/rr (1918) 48 (). L. R. 451;" (1919) 45 O. L. R. 176; llousbcrfjer v. Wcybuni Toimisite (1920) 50 D. L. R. 147. Provincial companies are subject to the Do- minion Winding-up Act, and tlicy nmst observe the requirements of Federal law as to navigation and ship- ping: Qncddy li. Boom Co. v. Davidson, 10 S. C. R. 222. 7. In the absence of Federal legislation, they are subject to provincial law regulating the trade they carry on. G. The Govoni()r-i])-Couiicil niuy, Troiu time to time, desjonate ggai. the seal of office to be used by the Secretary of State as tlie seal iinder which letters patent may be granted umlci- this Act. 2 Ed. A'Tl. c. 15, s. 5. 7. The applicants for such letters patent, who must be of the Application, full uga of twenty-one years, shall file in the Department of the 28 DOMINION COMPANIES ACT. Sect. 7. N:ime. I'lirposes. riiief place of business. Capital. Shares. Applicants. Stock taken 411(1 amount paid. Applicatioa without purpose of Kain. Name. Purposes. Chipf place of business. .\^pplicants. Memoran- flum of Agreement. Terms of admission. Secretary of State an application setting forth the following particulars : — (a) The proposed corporate name of the company, which shall not be that of any other known company, incorpor- ated or unincorporated, or any name liable to be con- founded therewith, or otherwise, on public grounds, objectionable; (h) The purposes for which its incorporation is sought; (c) The place within Canada which is to be its chief place of business ; {d) The proposed amount of its capital stock; (e) The number of shares and the amount of each share; (/) The names in full and the address and calling of each of the applicants, with special mention of the names of not more than fi'fteen and not less than three of their number, who are to be the first or provisional directors of the company; (g) The amount of stock taken by each applicant, the amount, if any, paid in upon the stock of each applicant, and the manner in which the same has been paid, and is held for the company. 2 E. VII., c. ] 5, s. 6. 7a. (1) WTien the application is for the creation of a corporation to carry on in more than one province of Canada, without pecuniary gain, objects of a national, patriotic, relig- ious, philanthropic, charitable, scientific, artistic, social, profes- sional, or sporting character, or the like, the applicants for such letters patent, who must be of the full age of twenty-one years, shall file in the Department of the Secretary of State an applica- tion setting forth: — (a) The proposed corporate name, which shall not be that of any other known corporation, association or body incorporated or unincorporated, or any name liable to be confounded therewith, or otherwise, on public grounds, objectionable ; (6) The purposes for which incorporation is sought; (c) The place within Canada where its chief office is to be situated ; (d) The names in full and the address and calling of each of the applicants with special mention of the names of not more than fifteen and not less than three of their number, who are to be the first or provisional directors or trustees of the corporation (2) The application shall be accompanied by a memoran- dum of agreement, in duplicate, which shall set out the by-laws or regulations of the corf)oration and shall, more particularly, provide by-laws or regulations upon the following matters : — (a) Conditions of membership, including societies or com- panies becoming members of the corporation ; APPLICATION FOR INCORPORATION. 29 {b) Mode of holding meetings, rights of voting and of Sect. 7. making, repealing or amending by-laws or regulations; (c) Appointment and removal of the directors, trustees. Meetings. committee or officers, and their respective powers and Directors, remuneration : Committee, , , , Ofljcers. (d) Provision for audit of accounts and appointment of Audit of auditors ; accounts. (e) Determination Avhether or how members miay with- Withdrawal draw from the corporation ; '^^ members. (/) Provision for custody of seal and certifying of docu- Seal, ments issued by the corporation (3) Any of the by-laws or regulations the applicants de- By-laws, sire may be embodied in the letters patent but in such case shall not be repealed or amended, except by the issue of sup- plementary letters patent. (4) By-laws or regulations not embodied in the letters Amendment patent may be repealed or amended, but such variation or of by-laws, amendment shall not be in force or acted on until the approval of the Secretary of State of Canada has been obtained. (5) Any existing corporation created by or under any Existing cor- Act of the Parliament of Canada for any of the objects porations. mentioned in subsection (1) of this section may apply under this section for the issue of letters patent creating it a corpor- ation under those provisions of Part I of this Act which apply to corporations created under this section, and upon the issue of such letters patent the said provisions shall apply to the corporation created thereby. (6) 1. The following provisions of Part I. of this Act Application shall not apply to corporations created under this section, ^ij R- S., c. naTiiely, sections 7, 7r, 8, 0, 26, 33. 38 to 13, botli inclusive, ''''^■ 43a to 43d, both inclusive, 45 to 54, both inclusive, 54a to 54f, both inclusive, 55 to 68, both inclusive, 68a, 70 to 78, both inclusive, 80 to 84, both inclusive, 86 to 88, botli inclusive, para- graphs (d) and (e) of section 89, section 90, 94a to 94c, both inclusive, 101 to 104, both inclusive, paragraphs (;) and (Jc) of subsection 2 of section ]05, and sections 114, 115. 2. The others sections of l*art I of this Act shnll apply to corporations created under this section. (7) In applying to coi'poi'iitions created nti(h'r this section interpreta- f.hosc sections of Part I of this Act which apply to such cor- (i^ii. porations : — (a) the word " company " shall be deemed to mean a " Company." corpf)ration so created ; (h) the word "shareholder" shall be deemed to mean a"Sl)are- member of such a corporation; bolder. (c) a provision that the votes of shareholders representing " r'ror>orti'.ii a specified proportion in value of the stock of a company "' ^j^"',;"' "^ shall be requisite for any purpose shall be deemed to ' •M) DOMINION COMPANIES ACT. Sect. 7. Issue of slinres w itliout nominal or par value. Statement as to preferred stock. nic;m (l):il the votes of a Tor tlKit ]tiir|)ose._ 7-8 Geo. like i>i-()[)()rl ioM are re(|iiisite V. c. 25, s. 4. statement as to capital, Equality shares. of Shares to be allotted at price fixed by Board or Letters Patent. 7m (l) I'jxiii (lie loiiiiatioii or reoi'gaiii/atioii of aii_v eoiii- pany, the letters patent may provide for the issue of the shares of the capital stock of such company without any nominal or par value, except in the case of preferred stock having a prefer- ence as to principal; and, (a) If such preferred stock or any part thereof has a preference as to principal, the letters patent shall state the amount of such preferred stock having such prefer- ence, the particular character of such preference, and the amount of each share thereof, which shall be five dollars or some multiple of five dollars, but not more than one hundred dollars ; and, (h) The letters patent shall set out the amount of capital with which the company will carry on business, which amount shall be not less than the amount of preferred stock (if any) authorized to be issued with a preference as to principal, and in addition thereto a sum equivalent to five dollars or to some multiple of five dollars for every share authorized to be issued other than such preferred stock ; but in no event shall the amount of such capital be less than five hundred dollars. (2) Such statement in the letters patent shall l)e in lien of any statements prescribed by this Act as to the amount or the maximum amount of the capital stock or the number of shares into which the same shall be divided, or the amount or the par value of such shares. (3) Each share of the capital stock without nominal oi' par value shall be equal to every other share of the capital stock, subject to the preferences given, to the preferred shares, if any, authorized to be issued. Every certificate of shares without nominal or par value shall have plainly written or printed upon its face the number of such shares which it represents and the number of such shares which the company is authorized to issue, and no such certificate shall express any nominal or par value of such shares. The certificates of preferred shares having a preference as to principal shall state briefiy the amount which the holder of any of such preferred shares shall be entitled to receive on account of principal from the surplus assets of the company in preference to the holders of other shares, and sliall state briefly any other rights or preferences given to the holders of such shares. (4) The issue and allotment of shares authorized by this section, other than shares of preferred stock having a preference as to principal, may be made for such consideration as may be prescribed in the letters patent, or as may be fixed by the board of directors pursuant to authority conferred in the letters APPLICATION FOR IXCORPORATION. 31 patent, or if the letters patent do not so provide, then by the Sect. 7. consent of the holders of two-thirds of each class of shares then outstanding given at a meeting called for that purpose in such manner as is prescribed by the by-laws. Any and all shares issued as permitted by this section shall be deemed fully paid and non-as.=e?sab]e and the holder of such shares shall not be liable to the company or to its creditors in respect thereof. (o) A comi)any to which this section applies shall not Commence- begin to carrv on business nor incur any debts until the "JfJ^J; ^^^. . amount of capital stated m the letters patent has been fully paid mit-horized in money, or in property taken at its actual value. In case the 'lebts. amount of capital stated in the letters patent is increased as provided by this Act, such company shall not increase the amount of its indebtedness then existing until it has received in money or property the amount of such increase of its stated capital. Any of the directors of the company who assent to the creation of any debt in violation of this section shall be liable jointly and severally for such debt; but no action shall be brought against any director unless within one year after the debt has been incurred the creditor has served upon the director written notice of intention to bold him personally liable for such debt. (6) A company to which this section applies shall not lie Commence- subject to section 26 of this Act business. (7) A company to which this- section applies shall not Limitation declare any dividend which reduces the amount of its capital of dividends, below the amount stated in the letters patent as the amount of capital with which the company will carry on business. In case any such dividend shall be declared the directors in whose administration the same shall have been declared, except those who may have caused their dissent therefrom to be entered upon the minutes of such directors at tlie time, or who were not pre- sent when such action was taken, shall be liable jointly and severally to such company and to the creditors thereof to the full amount of any loss sustained by such company or by its creditors respectively l)v reason of such di\i(lrii(1. 7-8 fico. V. c. 25, s. 4. 8. The application shall be in accordance with form A in the Form of ap- schoduh; to tliis Act and may ask to have embodied in the P>i''iif'""- letters patent then applied for, any provision which oould under this Part be contained in any by-law of the Company or of the directors approved by a vote of shareholders, which provision so embodied shall not, unless power is given therefor in the letters patent, be subject to repeal or alteration by any by-law. 2 E. VII., c. 15, s. 7.' 9. The applicntion shnll be accompanied by a memorandum Mcmoran- of agreement in duplicate under seal which shall be in accord- ijgjjg^^gnt. 3-2 DOMINION COMPANIES ACT. Sect. 9. aiicc with foiiii H in tlu' sclicdule to this Act. 2 E. VII. c. 15 — s. 7. (".nnlition precedent to issuing of letters pat- ejit to be oetjiblished. 10. Before the letters patent are issued the applicants shall establish to the satisfaction of the Secretary of State the siilli- eiency of their application and memorandum of agreement and tlic truth and sulHciency of the facts therein set forth, and that the proposed name is not the name of any other known incor- porated or unincorporated company or one likely to be con- founded with any such name; and for that purpose the Secre- tary of State shall take any requisite evidence in writing by oath or affirmation or by solemn declaration and shall keep of record any such evidence so taken. 2 E. VII., c. 15, s. 7. Procedure for incorporation. 1. Who may apply. 2. The application. (a) Name. (b) Objects. (c) Head office. (d) Capital. (e) Shares. (f) Applicants. (g) Stock taken. 3. Execution of petition. 4. Memorandum of agreement. 5. Proof in support of application. 6. Fees. Promoters. Liability on shares. Organization. Corporations without share capital (s. 7A). Shares without par value (s. 7B). Note on nature and characteristics of joint stock companies. Joint stock companies as distinguished from other corporations. Procedure for incorporation. Procedure Incorporation under the Act is obtained by petition, ltioii°^°'^°^" ^^ accordance with form *A,' set out in the schedule to the Act accompanied by a memorandum of agreement APPLICATION FOE IXCORPORATION. 33 in duplicate, in accordance with form 'B' in the sche- Sees. 7-10. dule. 1. Who may apply for incorporation. The Act, s. 7, requires that the applicants be of the Appiicauts full age of twenty-one years. Aliens are not excluded. JJppjy™'^^ The number of applicants must not be less than five, Each applicant must, of course, be a shareholder, though there is no provision in the Act as to the number of shares to be held by each. It would seem that it is not illegal to form a so-called ''one man" company, so long as all the requirements of the Act under which incorporation is obtained are complied with: Salomon v. Salomon [1897] A. C. 22, and see Lagunas, etc., Co. v. Lagunas Syndicate [1899] 2 Ch. 392 ; and promoters of a company are not bound to pro- vide it ^vith an independent board of directors, if the real truth is disclosed to those who are induced to join the company, per Lindley, ]M.R., at p. 426. See on the same point Wood v. lieesor (1895), 22 A. R. 57; Rielle v.Reid (1899),26 A. R. 54. Original subscribers to a company must be persons S2ii juris; if the applicants form only the minimum number, the infancy of one prevents the company ac- quiring legal existence and this defect is incurable; Qiicere as to married women : Hamilton - that certain specilic property shall be accepted by the company as a con- sideration for such issue, the Court will not, whilst the contract stands, inquire into the value of the considera- tion, even at the instance of the liquidator: Pell's Case (1870) L. B. 5 Ch. 11; Re Baglan Hall Co. (1870) L. E. 5 Ch. 346; Zm re Wragg, Limited (1897) 1 Ch. 796. Organization. Or?aniza- The procedure for organizing a company incorpor- ated under the Act is as follows : 1. A meeting of the provisional directors is called. These are usually clerks in the office of the company's solicitor. At this meeting the letters patent of the com- pany are read ; tlie shares subscribed for in the memor- andum of agreement are allotted, and paid in full. Notices are directed to be sent for a shareholders' meeting called for the purpose of organizing the com- pany, electing directors, passing general by-laws, in- cluding a borrowing by-law, a by-law to permit the purchasing of shares in other companies and to trans- act such other business as may be desirable. The meeting then adjourns. 2. The meeting of shareholders approves the pro- ceedings of the provisional directors. The provisional directors are elected permanent directors, the election being by ballot. The convenient course is to re-elect the provisional directors. It must be remembered that the provisional directors must be replaced by the same number of permanent directors. The meeting then ad- journs until after the meeting of the permanent direc- tors which is held forthwith to pass the by-laws. 3. The permanent directors meet, pass the by-laws, elect officers, approve the form of share certificate and corporate seal and then adjourn. In connection with the borrowing by-law usually passed at this meeting it should be observed that most of the Banks require a by-law in the special form ap- proved by the bank. Accordingly it is advisable to ascertain the name of the bank with which the company OEGANIZATION. 43 proposes to conduct its banking business. Unless the Sees. 7-10. company proposes to borrow money by mortgage or an issue of bonds, debenture stock, notes or similar securi- ties, no additional borrowing by-law will usually be required; and in cases where such borrowing is pro- posed it may either be authorized by a general by-law passed pursuant to section 69 or a specific by-law au- thorizing the security in question may be passed. If there is to be an issue of preference shares a by- law creating the issue may be passed at this stage. 4. The adjourned meeting of shareholders re- assembles, ratifies the by-laws and adjourns. 5. The permanent directors meet and resign in suc- cession in favor of the persons who are to act as the actual and continuing directors of the company. Each director as he resigns transfers the share of stock held by him to his successor who takes his place on the board. The usual qualification of a director proscribed by the by-laws is the holding of one share and it is accordingly unnecessary to allot further shares to the incoming directors. If the by-laws provide, as they should, that the directors may appoint officers by re- sohition, the new board appoints officers for the ensuing year. The meeting then adjourns. Various other matters will require attention at sub- sequent meetings of the directors. A prospectus or a statement in lieu of a prospectus will have to be pre- pared, signed by all the directors and filed in the office of the Secretary of State, s. 43. The amendment of 1917, 7-8 Geo. V. c. 23, s. 7, re- Minimum ^ quires the prospectus to state the minimum subscrip- ^" '"'"^""'°' tion on which the directors may proceed to allotment; and the statement in lieu of prospectus (where no pros- pectus is issued) to state ''the minimum subscription (if any) fixed by the letters patent, sui^plemontary letters patent or by-laws on which the company may proceed to allotment" (Form F as amended by 8-9 V. C.24). These provisions are adapted from the Imperial Companies (Consolidation) Act, but the Dominion Act does not contain any jirovision similar to s. 85 of tlio Tmy)erinl Act wliicli forl)ids tlie directors in -1-4 DOMINION COMPANIES ACT. Sees. 7-10. ^1h^ case of the first allotment oi' any share capital offered to the public for subscription, or where there is no invitation to the i)ublic in the case of the first allotment of share capital payable in cash, from mak- ing- any allotment, until the amount (if any) fixed by the memorandum or articles and named in the pro- spectus (where there is a public offer) or in the state- ment in lieu of a i)rospectus (where there is no pub- lic oft"er) as the minimum subscription on which the directors may proceed to allotment ; or if no amount is so fixed and named, then the whole amount offered for subscription or payable in cash has been subscribed and the amount payable on application (being not less than five per cent.) has been paid to and received by the company. Consequently it is difficult to see the object of the present provision in the Dominion Act. In any event it is advisable to state the amount of the minimum subscription in the general laws, and not in the letters patent. To state a nominal amount, viz., one share, is not unusual and is a compliance with the statutory provision. Purchase of If the company is acquiring property from a vendor a by-law should be passed authorizing the purchase and a contract of sale and purchase considered and ap- proved. The by-law should provide for its submission to the shareholders for ratification, the execution of the contract by the officers and the payment of the con- sideration and allotment of shares (where such form a part of the consideration) on confirmation by the share- holders and the execution and delivery of the convey- ances or transfers of the property to be acquired. If any director is interested in the sale to the company he must make full disclosure of his interest and refrain from voting, and it is important that the by-laws should be properly framed to protect a director con- tracting with the company who makes disclosure and does not vote. This point is further considered in the notes to s. 80. If the company's shares or securities are to be sold to the public through a broker or underwriter the execution of a formal contract should be authorized. ORGANIZATION. 45 Where extensive dealing in tlie company's shares is Sees. 7-10. anticipated a registrar and transfer agent should be Transfer appointed. For the requirements of registrars and -igent. transfer agents, see the notes to s. 64. The by-laws should provide that the place of the Head office. Ijrincipal office of the company is to be situate in a de- signated city or town and at such place therein as the directors may from time to time by resolution appoint. The directors should pass the necessary resolution and cause to be inserted in the Canada Gazette the notice required by s. 30. The company is forbidden to commence its opera- operations, tions or incur any liability before ten per centum of its authorized capital is subscribed and paid for, s. 26. The first auditors of the company may be appointed Auditor*. by the directors and their remuneration fixed, or the appointment left till the first annual meeting, s. 94A. In addition to books of account and those required Book«. for the company's business dealings the following are necessary: 1. A share certificate book, and if there is more than one class of shares then a book for each class. 2. A minute book or minute books. Minutes of directors' and shareholders' meetings are frequently kept in separate books. 3. A book or books to satisfy the requirements of B. 89. 4. The registrar of transfers required by s. 90. The books in 3 and 4 above are open to the inspec- tion of shareholders, creditors and tlieir personal representatives, and of any judgment creditor of a shareholder, and accordingly it is important that the information therein required to be set out be kept sepa- rate from the minute books which are not open to such inspection. It is to be noted that the alphabetical arrangement of the names of present and past shareholders required by sub-section (b) of section 90 can not be maintained unless a loose-leaf book is used. The combined "Stock Ledger and Register of Transfers" in common use offends against the above provision. 46 DOMINION COMPANIES ACT. Sees. 7-10. Corporations without share capital (s. 7A). Corporations Previously to the enactment of section 7A in 1917, JiKire"' corporations of the classes designated by the section -•apiui. Avere incorporated by private Act. This is no longer necessary. The section is limited to associations incor- porated : — (a) to carry on in more than one province of Can- ada (b) without pecuniary gain (c) objects of a national, patriotic, religious, phil- anthropic, charitable, scientific, artistic, social, profes- sional or sporting character, or the like. Incorporation is obtained by filing an application and memorandum of agreement in duplicate. The memorandum of agreement must set out the by-laws or regulations of the corporation which must cover the matters set out in sub-sections (2) (a) to (f ). Such of the by-laws or regul^^tions as the applicants desire may be embodied in the letters patent; in which case they can only be repealed or amended by supplementary letters patent. If not so embodied any variation or amendment of the by-laws requires the approval of the Secretary of State. As the by-laws of a corporation governed by the section (unlike those of companies incorporated under s. 7) are either incorporated in the letters patent or are on file in the Department of the Secretary of State they are public documents and any person dealing with such corporations must satisfy himself in all cases that the provisions of the by-laws have been complied with; for the public will be deemed to have notice of the contents of such by-laws. Presumably the same applies to any amendments or variations of the original by- laws, though sub-section (4) of section 7 A does not expressly provide that such amendments or variations must be filed. See Gold v. Maldaver (1912), 4 0. W. N. 106. The provisions of Part I, enumerated in sub-section (6) do not apply to corporations created under the section, so that they enjoy amongst others the follow- ing exemptions : SHARES WITHOUT PAR VALUE. 47 (1) There is no restriction on commencement of Sees. 7-10. business (s. 26). (2) The word ** Limited" is not required after the name of the corporation (ss. 33, 114, 115). (3) No prospectus or statement in lieu of a prospec- tus is required to be filed (ss. 43-43D). (4) Sections dealing with auditors do not apply, but provision for audit of accounts and appointment of auditors must be made in the by-laws (s. 7A (2) {d). The tariff of fees applicable to corporations gov- erned by s. 7A is given under s. 24. The right of such corporations to acquire and hold land will in all cases be subject to the provisions of the provisional Act respecting Mortmain and charitable uses. Shares without par value (s. 7B). The Companies Act Amendment Act of 1917 issue of adopted with slight modifications the provisions re-J,';;'J^j^'5nai' cently introduced in some of the states of the American or par value. Union for the creation of shares without nominal or par value. Such provisions appear in the corporation laws of New York, Delaware, Maryland and other states. Among the advantages claimed for the innovation are that shares without par value purport to be what all shares really are, viz., participation certificates. A share certificate for shares of no nominal or par value must have on its face the number of shares which it represents and the number of such shares which the company is authorized to issue. It is not clear what, if any, transfer tax is payable on the transfer of such shares under provincial acts such as the Ontario Corporations Tax Act which im- poses a transfer tax calculated on the par value of the shares transferred. This difficulty is met in the corres- ponding Delaware Act by providing that for the pur- poses of taxation the par value of such shares shall be deemed to be one hundred dollars. It is further claimed that the above provisions enables shares to be sold at their actual market value 48 - DOMINION COMPANIES ACT. Sees. 7-10. when fresh capital is needed, wlien conditions are such that the company's shares could not be sold at par. The issue of such shares faciUtates adjustment of rights in the case of reorganizations or amalgamations. Companies to which the section applies are not sub- ject to section 26 of the Act. Presumably companies incorporated under s. 7 may, by appropriate proceedings under s. 34, obtain authorization to issue shares without par value. The section does not appear to have been extensively mad^ use of in Canada since its introduction ; but in the United States on the other hand the tendency seems to be in favor of taking advantage of similar provi- sions in jurisdictions where they are in force. For a further discussion of such shares, see the article by V. Morawetz in (1912-3) 26 Harvard Law Review at p. 729. Note on the nature and characteristics of joint stock companies generally and on certain incidents and advantages of incorporation. Nature of A Company is a legal entity in contemplation of law seSiiiy. ^^^y ^^^ ^^^^ physically. Its existence is separate and distinct from and in addition to that of the persons who at any one time constitute all the members of the corporation. This is a characteristic which cannot be too strongly emphasized, and the distinction between the personality of the corporate body and that of its individual members whether regarded singly or in the aggregate must necessarily be borne in mind when con- sidering the powers, rights and liabilities of a company. As illustrating this distinction it may be noted that a shareholder's interest is merely a right to a share of the j)rofits of the company and is not an interest in the real or personal property of the company: Bank of Hindustan v. Allison (1870) L. R. 6 C. P. 54, at p. 73 ; he has individually no seisin legal or equitable in the pro- I)erty of the company: Acland v. Lewis (1860) 30 L. J. C. P. 29, but the title is in the corporate body, per Maule, J., Baxter v. Brown (1845) 7 M. & G. 198, at p. 210, and "an incorporated company's assets are its XATUKE AND CHARACTERISTICS OF COMPAXIES. 49 property and not the property of the shareholders for Sees. 7-10. the time being," per Lindley, L.J., Re Newman & Co. (1895) 1 Ch. 674, at p. 685. A member of a company may contract with a com- pany as if he were a stranger : Dunston v. Imperial, etc. (1832) 3 B. & Ad. 125, p. 132; per Lindley, L.J., in Farrar v. Farrars (1888) 40 Ch. D. 395, at p. 409; a creditor of a corporation is not a creditor of any one or more of the sliareholders, liis debtor being "that impal- pable thing the corporation," per Jessel, M.R., Flit- croft's Case (1882) 21 Ch. D. 519, at p. 533, and in no legal sense are the individual shareholders the owners of the company's property, per Denman, C.J., Reg. v. Arnaud (1846) 9 Q. B. 806, at p. 817. This distinction just pointed out will also serve to mark the difference between an incorporated company and a partnership. In some respects the rights" and liabilities of members of each are similar, but a com- pany and a partnership are essentially different in their nature. A partnership cannot be said to have a personality distinct from that of its members, and its powers, if limited at all, are only limited by the con- tract of partnership and, viewed from the standpoint of strangers dealing with the partnership, are determined largely upon the law of principal and agent. There are many different classes into which cor- Classes of porations may be divided according as their nature, [;^^'P'^''''' purpose or manner of creation is regarded. One classification which bears directly on the sub- ject in hand is that of Common Law Corporations and Statutory Corporations. The difference between these two classes is clearly shown by Bowen, L.J., in the case of Baroness Wenlock v. River Dee Co. (1887) 36 Ch. D. 674, note at p. 685. lie says "At common hiw a cor- poration created by King's charter has prima facie . . . the power to do with its property all such acts as an ordinary person can do, and to bind itself to such contracts as an ordinary ])erson can bind liimself to." And see J>hickstone, Vol. 1, ]). 415 (411i ed., 1770). "When you come to corporations created by statute. ions. D.C.A. 50 DOMINION COMPANIES ACT. Sees. 7-10. tlio qnestion seems to me entirely different, and I do not think it is quite satisfactory to say that you must take the statute as if it had created a corporation at common law, and then see whether it took away any of the incidents of a corporation at common law. " . . . ''It creates a statutory corporation. . . . What you have to do is to find out what this statutory crea- ture is . . . You must look at the statute only ... It is made up of persons who can act within certain limits, but in order to ascertain what are the limits, we must look at the statute." It was formerly considered that companies incor- porated under Part I. were statutory corporations, but since the recent decisions referred to under 'Powers' in the notes to section 29, it is now determined tliat such companies are not statutory companies, and that the doctrine ultra vires does not apply to them. A further illustration of the nature and character- istics of companies is derived from their classification into ; ] Public (a) Public Companies fulfilling some public function _ such as Municipal Corporations. Quasi-piibiic (b) Quasl-Public Companies established primarily for their own emolument, though in some respects the pu])iic are largely interested in the due exercise of their rights and powers. Examples of this class are railway, canal, road, gas and waterworks com- panies. Private. (c) Private companies having for their primary object the making of profit for their members in the pur- suit of various commercial enterprises in which the public are not at all directly interested. It is largely to this class of companies that this book relates. If incorporated by special Act the company's powers, its liabilities, the rights of its shareholders are determined by the special Act of incorporation : Attorney-General v. Great Northern Ry. Co. (1800) 1 Do & Sin. 154 and by certain general provisions applicable to all such companies where these are not inconsistent with the provisions of the Special Act. JOINT STOCK COMPANIES. 51 These general provisions wliicli govern companies in- Sees. 7-10. corporated by Special Act of Parliament or of the Legislature are embodied in some provinces in Separ- ate enactments known as the Companies Clauses Acts. In the other provinces the usual method is either to insert in the Special Act of Incorporation all the requi- site provisions or to incorporate by reference to tlie Companies Act certain of its j)rovisions, but unless these are specially so incorporated they do not apply. Joint stock companies as distinguished from other corporations. Joint stock companies are associations who contri- Advantages bute to a common fund which is called the capital of the stojk com- company. This is divided into equal portions called panies. stock or shares, in proportion to his holding of which each member of the company shares in the profit or loss resulting from the employment of the capital in the enterprise which the company is created to engage in; a holder of stock or shares may transfer his interest to another under certain prescribed conditions and in a specified manner, thereby causing himself to cease to be, and his transferee to become, a member of the company. It is this feature of the division of the j Division capital into equal shares and the ownership of such <>' ^*p'^^- shares being had by the various members of the cor- poration that gives it its distinctive name of " Joint Stock Company." 2. Again, a general ciiaracteristic of joint stock com- 2. Limited panies is the privilege of limited liability conferred by ii"1>'1»^t- sucli iiK'orporalioii. The pi'iviloge of limited ]ial)ility affords one of the greatest inducements to the form- ation of such companies. In this respect companies so incorporated possess a great advantage over individ- uals and over partnerships. According to the general law a person wlio goes into business either on his own account or as partner in a firm is liable for all the debts incurred by the business to the full extent of his means. As was said by Lord Justice James in one case: 52 DOMINION COMPANIES ACT. Sees. 7-10. ** As between tlie partners and the outside world ~ (whatever may be their private arrangements between themselves), each partner is the unlimited agent of every other in every matter connected with the part- nership business or which he represents as partner- ship business, and not being in its nature beyond the scope of the partnership. A partner who may not have a farthing of capital left may take moneys or assets of the partnership to the value of millions, may biiid the partnership by contracts to any amount, and may even, as has been shown in many painful instances in this court, involve his innocent partners in unlimited amounts for frauds which he has craftily concealed from them." Limited As distinguished from this condition of affairs the habi ity. shareholders in a joint stock company with limited liability risk only the amount of the capital for which they subscribe and are not liable for debts of the company beyond that amount. It follows from this position that joint stock companies afford superior '' sleeping-partnership " facilities. In case of a part- nership a sleeping partner takes no part in the man- agement and is not ostensibly a partner, yet he incurs the same liability as the ordinary partner and his whole fortune is liable to pay the debts of the partner- ship. If, however, the business is worked as an incor- porated company, the sleeping partner can have as large an interest as he likes without incurring any liability beyond the shares for which he subscribes, and moreover, there is no need for his name to appear in the list of shareholders or elsewhere in connection with the company. His shares can be placed in the name of a trustee or nominee or in the name of sev- eral. This is in many cases a matter of great import- ance for it frequently happens that prominent busi- ness men, while willing to subscribe to an undertaking, make it a condition that their name shall not appear. 3. Borrowing 3. Another characteristic incident of joint stock f.ifiiities. companies is the superior borrowing facilities which they possess by the issue of bonds, debenture stock or other securities. JOINT STOCK COMPANIES. 53 4. Other advantages possessed by these com- Sees. 7-10. panies consist in the facilities offered by corporate 4. combina- existence for effecting combinations and amalgania- 'ions, tions either by way of co-operation, reciprocal conces- sions or other arrangements. 5. Further, a very valuable feature in the forma- 5 Powers of tion of joint stock companies is that persons trading as 'lireetors. a company can by that means effectually restrict the powers of the acting partners, that is of the directors. In the case of a partnership every partner is the un- limited agent of the partnership to do every kind of business for it and to bind it by every sort of contract, but the directors of the company are in a very different position. They are special agents and have only such powers as are given to them by the by-laws of the company and by the Act under which they are incor- porated, 6. Many advantages also result from the distinct 0. Trfin«,- and separate existence of the company independent of S'share's.^ the shareholders who from time to time compose it. The death of a shareholder does not interfere with the continued existence of the company as it does in the case of a partnership nor does the bankruptcy of a shareholder nor his lunacy. In the case of a partner- ship every change of the firm necessitates the drawing of new conveyances, which of course becomes unneces- sary where the change is merely a transfer of shares in the company. This is only one feature illustrating the facility with which new members may be intro- duce<^ and others who desire to realize upon their assets may retire from companies. 7. The shares and stocks in such a company also 7 simip.^. afford in many instances an asset of commercial value wliicli can be used with great advantage in any other enterprise in which the owner is engaged. 11. The letters patent shall recite such of the established Avprmcnts averments in the applioation and momorandmn of agreement *" ^'' , as to the Secretary of State seems expedient. 2 E. YTL, c. 15, 8. 8. 54 DOMINION COMPANIES ACT. Sect. 12. 12. The Secretary of State may give to the company a cor- Xiine^if poi'^ite name, different from that proposed by the applicants . u'mpnny. ii' the proposed name is objectionable. 2 E. VII., c. 15, s. 9. See the notes under section 21. .Nuticr to 1)6 published. Existing companies may be in- corporated. i:ffcct of letters patent Names of sbarehold- ITS. Effect of letters [latent. Scope of letters patent First lii' nctors. 13. TvTotice of the grniiting of the letters patent sliall be forthwith given by the Secretary of State of Canada by one insertion in the Canada Gazette, in the form C in the Schedule to this Act; and thereupon, from the date of the letters patent, the persons therein named, and such persons as have become subscribers to the memorandum of asfreement or who thereafter become shareholders in the company, and their successors, shall be a body corporate and politic, by the name mentioned in the letters patent. 7-8 Geo. V. c. 25, s. 5. As to shareholders, see the note to ss. 38 ff. As to Existing Companies. 14. Any company heretofore incorporated for any purpose or object for which letters patent may be issued under this Part, whether under a special or a general Act, and now being a sub- sisting and valid corporation, may apply for letters patent to carry on its business imder this Part, and the Secretary of State, with the approval of the Governor in Council, may direct the issue of letters patent incorporating the shareholders of the said company as a company under this Part. 2. Upon the issuing of such letters patent all the rights, property and obligations of the former company shall be and become transferred to the new company, and all proceedings may be continued or commenced by or against the new com- pany that might have been continued or commenced by or against the old company. 3. It shall not be necessary in any such letters patent to set out the names of the shareholders. 4. After the issue of such letters patent the company shall be governed in all respects by the provisions of this Part, 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. 2 E. VII., c. 15, s. 11. 15. If a subsisting company applies for the issue of letters patent under this Part, the Secretary of State may, by the letters patent, extend the powers of tlie company to such other objects for which letters patent may be issued under this Part as the applicant desires, and as the Secretary of State thinks fit to include in the letters patent. 2 E. VII., c. 15, s. 12. 16. The Secretary of State may in any letters patent issued under this Part to any subsisting company name the first directors of the new company, and the letters patent may be issued to the new company by the name of the old company or by another name. 2 E. VII., c. 15, s. 12. EXISTING COMPANIES. 55 17. Any company incorporated under any general or special Sect. 17. Act of any of the provinces of Canada, and any company duly — 7—, incorporated under the laws of the United Kingdom or of any f^afpanfes foreign country for any of the purposes or objects for wliich incorporatwl letters patent may be issued under this Part, and being at the {'^ 4^' ™^-^ time of the application a subsisting and valid corporation, may a ted umlor apply for letters patent under this Part, and the Secretary of tl'is Part. State, upon receiving satisfactory evidence that the Act of in- corporation or charter of the company so applying is valid and subsisting and that no public or private interest will be pre- judiced, may issue letters patent incorporating the shareholders of the company so applying as a company under this Part, limiting, if necessary, the powers of the company to such purposes or objects as might have been granted had the share- holders applied in the first instance to the Secretary of State for letters patent under this Part, and thereupon all the rights, property and obligations of the former company shall be and become transferred to the new company, and all proceedings may be continued or commenced by or against the new company continued^ " that might have been continued or commenced by or against the old company. 2. It shall not be necessary in any such letters patent to set Name of out the names of the shareholders. .sliareholders. 3. After the issue of such letters patent the company shall be Effect uf governed in all respects by the provisions of this Part, except ^'^^^ters that the liability of the shareholders to creditors of the old com- panv shall remain as at the time of the issue of the letters patent. 2 E. VII., c. 15, s. 13. 18. Every company desirous of obtaining letters patent Pioceoiiings under the last preceding section shall first file in the office of i'^^'" incor- the Secretary of State of Canada a certified copy of the charter .'^"alJt,!',!".! *^' or Act incorporating the company,- and shall also designate the cornpanicx. place in Canada where its principal office will be situated and the name of the agent or manager in Canada authorized to re- present the company and to accept process in all suits and pro- ceedings against the company for any liabilities incurred by the company therein. 2 E. VII., c. 15, s. 13. 19. Every such company to which such letters patent have Riturn tn been granted, when so required, shall make a return to the ^limster. Secretary of State of the names of its shareholders, the amount of its paid-up capital and the value of its real and j)cr!ional estate hehl in Cannfla, and, in default of making the said return within three months, the letters patent may be cancelled, '/i E. VII., c. 15, s. 13. 20. Notice of the issue of such letters patent shall be pub- I'liblication lished in the Canada Gazette. 2 E. VII., c. 15, s. 13. "^ ""*'^«- 56 DOMINIOl^ COMPANIES ACT. Sees. 14-20. The above sections provide machinery whereby ex- isting companies may be brought under the provisions of this act. As regards companies incorporated under provincial cliarters it is to be noted that section 17 does not purport to authorize the Secretary of State to grant rights and powers to existing companies which enlarge their existence and capacity, which would be ultra vires. Bonanza Creek Gold Mining Co. v. The King (1916) 1 A. C. 566; Atts.-Gen. for Ontario, £c. v. Att.-Gen. for Canada (1916) 1 A. C. 598. What appar- ently is contemplated is the incorporation of a new company under a Dominion charter, to which new com- pany are transferred the rights and obligations of the old company. For an example of a provincial company brought under the jurisdiction of the Dominion, see Novell v. Canada Southern By. (1883-4) 9 A. R. 310. In practice these sections are never made use of. If it is desired to turn a provincial company into a Dominion company the most convenient method is to incorporate a new Dominion company to which the assets of the l^rovincial comj^any may be sold. The provincial com- pany is then wound up and its shareholders receive shares in the new company. Where a foreign company, e.g., an American comjjany desires to carry on its operations throughout the Dominion of Canada under a Dominion charter the practice is to have a subsidiary company with a small capitalization incorporated under the Dominion Act, which has for its officers and directors nominees of the parent company, the corpor- ate existence of which is not affected. Where a provincial company was re-incorporated under a private Act of the Dominion Parliament it was held on the construction of the Act that the sharehold- ers of the old company did not become shareholders of the new company in the absence of allotment to them of shares in the latter : Re Dominion Trust Co. and Allen (1917) 37 D. L. R. 251. Change of Name. Minister 21. If it is made to appear to the satisfaction of the Seere- may change tary of State that the name of a company, given by original or supplemen- supplementary letters patent issued under this Part, is the same tary letters, as the name af an existing incorporated or unincorporated com- CHANGE OF NAME. 57 pany, or so similar thereto as to be liable to be confounded Sect. 21. therewith, the Secretary of State may direct the issue of supple- mentary letters patent, reciting the former letters and changing the name of the company to some other name which shall be set forth in the supplementary letters patent. 2 E. VII., c. 15, g. 14. 22. When a company is desirous of adopting another name. Company the Secretary of State, upon being satisfied that the change "'•'^y jjbtiiin desired is not for any improper purpose, may direct the issue of name! supplementary letters patent, reciting the former letters patent and changing the name of the company to some other name, which shall be set forth in the supplementary letters latent. 2 E. VII., c. 15, s. 15. 23. No alteration of name under the two sections last pre- Change not ceding shall aifect the rights or obligations of the company; and to^ affect all proceedings may be continued or commenced by or against obligations. the company imder its new name that might have been continued or commenced by or against the company under its former name. 2 E. VII., c. 15, s. 16. The name of the company is also referred to in the following- sections of the Act : — 7 (1) (a) (Application to set (mt proposed name which must be unobjectionable) ; s. 12 (The Minister may ,^ive a name different from that jiroposed if objectionable) ; s. 16 (where existing* company is re- incorporated name of old company or a new name may be given); s. 33 (name followed by word "limited" must be used in certain cases and affixed outside of chief office) ; s. TOO (mention of name in legal proceed- ings sufficient without setting forth mode of incorpora- ' tion); s. 114 (penalty for neglect to keep printed or affixed name of company and word "limited") ; s. 115 (penalty for failure to keep name of com]iany followed by word "limited" on seal, notice, bill or note, bill of parcels, invoice or receipt). The name of a company must be free t'loiii objec- to be iree tion and the petition for incorporation should state ^][,^[!^^.tj,^„ that the proposed name is not that of any other exist- ing company oi" partner.ship. The consent of the Minister to the adoption ol' tlie name selected may also be withheld on tiie ground that tlic words "Royal," "Imperial," "Emi)ire," etc., are .included, if the effect 58 DOMINION COMPANIES ACT. Sees. 21-23. of such inclusion is to indicate that the company is connected with the Government. This point is covered by dispatches from the Colonial Office dated 8th De- cember, 1899, 27thMay, 1908, and 19th February, 1909. Likewise the addition of "Canadian" and "Dominion" would be objectionable on the same grounds. It is sufficiently clear from what has been said above that it is highly desirable to make enquiry at the office of the Secretary of State whether the proposed name will be allowed, and it will be found to be a convenient practice to do this before the documents leading to in- corporation are executed. If the Secretary of State finds the proposed name objectionable Section 12 of the Act authorizes him to give the company a different name from the one asked for. There is nothing to prevent an existing company from opposing before the Secretary of State the incor- poration of a new company with an objectionable name before the letters patent are issued. This was done in the case of the application for the incorporation of a company with the name "Linde Canadian Refrigera- ■tion Company, Limited." The name was objected to on the ground of similarity with the name "The Linde British Refrigeration Company, Limited." The objection was not upheld, the name not being deemed sufficiently similar to deceive. After incorporation the company's name may be changed : Change (a) By the Secretary of State. after zi \ » • c iiic-orpo:*- " (b) At the lustance of the compauy. (c) At the instance of persons prejudicially af- fected. The incorporation of a company with a certain name does not of itself entitle the company to use that name if objection is subsequently made. Section 21 of the Act provides machinery by which after incorpora- tion objection can be made to the corporate name be- fore the Secretary of State on the ground of its being so similar to that of some existing incorporated or un- incorporated company as to lead to confusion. For the meaning of the term "unincorporated com- pany" see In Re Russell Literary and Scientific Asso- tion. CHANGE OF NAME. 59 elation; Figgins v. Bagh'mo (1898) 2 Cli. 72; In 7/e Sees. 21-23. Jones; Clegg v. Ellison (1898) 2 Ch. 83. The topic may conveniently be discussed under the following headings : — (1) By whom objection may be made. (2) What companies are subject to this section. (3) Forum and procedure. (4) The grounds on which objection will be sus- tained. Dealing with these in order, as to (1) the objection who »«> must be made on behalf of an existing incorporated or o^J*"**^- unincorporated company. An individual, and doubt- less a partnership, or a group of individuals not falling within the definitions of an unincorporated com- pany have no locus standi under this section whatever their rights may be at common law, cf. Canadian Na- tional Investors, Limited v. Canadian National Estates (1911-12) 1 W. W. R. 87. The company seeking to protect its right to its name need not be a' Dominion company. It has been held in England that a foreign trader who has no local agency but whose goods are marketed in England is entitled to restrain a piracy of his trade name : Panhard et Levassor v. Panhard Levassor Motor Co., Limited (1901) 2 Ch. 513. (2) The Act applies only to companies incorpor- Aiypiicati«»i ated under it and the provisions of Section 21 cannot ^^ oeftioa. be relied on where the company whose name is objected to is not a Dominion company. The objection to simi- larity of names does not apply where a company is al)out to be wound up and the new company shows that the company whose name is to be used consents to such use. (8) The forum provided by this section is the Secre- Forum »><< tary of State. No special procedure is indicated and in i>''oced«r<'. practice complaint is usually made by letters to the De- partment at Ottawa, which communicates the ol)jection to the dclinciuent company. If tlie facts are clear and no answer is made to the objection the Secretary of State acts thereon without further formality. If the facts are disputed an opportunity is given for a hear- ing before the Minister. Tlie question so determined by him would doubtless be res judicata as between the 60 DOMINION COMPANIES ACT. Sees. 21-23. parties, l)iil i)r()l)ably not as to others. The opinion oi' the registrar as to simihirity is not conchisive on the Conrt under tlie Investment and Loan Societies Act, Statutes of British Columbia, 1898, c. 7, s. 2, B. C. Per- vimieut V. Wooton (1899) 6 B. C. R. 882. The question arises whether an objection to the name of a Dominion company is a matter for the Secre- tary of State alone to deal with so that the jurisdiction of the courts is excluded, on the principle that letters patent having been granted by the Crown conferring a particular name on a company such name is an irre- vocable franchise, the enjoyment of which is not open to question in the courts : Travellers v. Travellers (1911) 20 Que. K. B. 437. In England the procedure is to apply to the Court for an injunction and in practice this is the course pursued in Canada. See Canadian National Investors, Limited v. Canadian National Estates (1911-12) 1 W. W. R. 87, where the registrar had permitted the registration of a company with a name so similar to that of a company previously incor- porated as to be calculated to deceive, and the company subsequently incorporated was restrained from carry- ing on such business. As the provisions of the British Columbia Companies Act (1910) c. 7,s.l8(l) (2) under wiiicli the above case was decided were somewhat dif- ferent from those of this section, the case does not dis- pose of the question. See also John Palmer Co. v. Palmer-McLellan Shoe-Pack Co. (1917) 37 D. L. R. 201, 228. Groun/is of (4) The grouiids on which an objection will be sus- o jec ion. Gained are clearly defined in the numerous English cases on the subject. Doubtless the Minister in dealing with any specific case would be guided by these principles and they are of course applicable where a remedy is sought in the Courts. The Secretary of State has held that the names "Linde Canadian Refrigeration Company, Limited," and ^'Linde British Refrigeration Com- pany, Limited" were not so similar as to deceive. On the other hand where a company called ''British Cana- dian Canners, Limited," was using in its trade mark "Canadian Canners," the Secretary of State granted CHAXGE OF NAME. 61 the application of the Dominion Canners, Limited, for Sees. 21-23. the changing of the name of the former company, In^ doing so the Minister relied on English cases cited in the arg-ument. The principle on which the courts will act to re- strain the use of a name is the same as that which pro- tects i^ersons in the use of trade marks, i.e., one trader is not permitted to represent his undertaking or his goods to be the undertaking or goods of his competitor : Boston Rubber Co. v. Boston Rubber Co. of Montreal (1902) 32 S. C. R. 315 ; Sovereen Mill, dc, Co. v. SimcoQ Mill, Sc, Co. (1904) 3 0. W. R. 681. Fraud need not be shown: North Cheshire and Manchester Brewery Co. v. Manchester Brewery Co. (1899) A. C. 83. Similarity of business as well as similarity of name and the fact that both businesses are carried on in the same locality is an important feature. Merchant Banking Company of London v. The Merchants Joint Stock Bank (1878) 9 Ch. D. 560. In addition to similarity of name there must be likelihood of confusion, and it is usually necessary to show that such confusion has arisen to the damage of the plaintiff company. See Laing Packing and Provi- sions Co. V. Laing (1904) Q. R. 25 S. C. 344, followed in Lamontagne v. Girard (1911), Q. R. 39 S. C. 179. See also General Reversionary Investment v. Gen- eral Reversionary Co. (1898) 1 Megone 65. In Canada Permanent v. British Columbia Permanent (1899) 6 B. C. R. 377 ''British Columbia Loan and Savings Co." was lield not to be so similar to ''Canada Permanent Loan and Savings Co." as to be calculated to deceive the public. In some cases the right to use an existing trade name may be acquired, as for example where the good will of an existing business is purchased : Canada Paint v. William Johnson £ Sons (1893) Q. R. 4 S. C. 253. S(»e Montreal Lilhographing Co. v. Sabiston (1899) A. C. 6J0, at p. 613, also Kingston Miller v. Thomas Kingston dc Co. (1912) 1 Ch. 575, at p. 581, and Rose v. McLean Publishing Co. (1897) 24 A. R. 240; Boston Rubber Shoe Co. v. Boston Rubber Co. of Montreal (1902) 32 S. C. R. 315; /ile Elkinglon & Co. (190S) U Can. Ex. Ct. 62 DOMINION COMPANIES ACT. Sees. 21-23. Rep. 2'93 ; Standard Ideal v. Standard Mfg. Co. (1911) A. C. 78. Where a particular name has been given to a Do- minion company, an interim injunction was granted to restrain a provincial company subsequently incorpor- ated from operating under the same name : Semi Heady V. Semi Ready (1910) 15 B. C. R. 301. In Travellers v. Travellers (1911) 20 K. B. Que. 437, the plaintiff company, an American corpora- tion, brought an action to restrain the defendant from continuing to use the name under which it had been incorporated on the ground that it was calculated to deceive and did in fact deceive the public. The defendant company had been incor- porated by special act of the Dominion Parliament. It was held that as the Dominion Parliament had conferred the name upon the company it was not open to the courts to interfere with the use of such name as such interference would amount to a denial of the right of the Dominion company to existence and the exercise of the rights and powers conferred on it by Parliament. Lavergne, J., delivering the judgment of the Court, pointed out at p. 441 that the case was one of a company incorporated by Act of Parliament, not by letters patent. Qumre, whether the same rules would apply in the latter case, and see the dissenting judg- ment of Cross, J. The use of the name given to a com- pany by the letters patent Avill not be restrained be- cause it resembles in part the name of another com- pau}' whose incor-poration is earlier in date: John Palmer Co. v. Palmer McLellan Shoe Pack Co. (1917) 37 D. L. R. 201. See further on the question of the right to exclu- sive use of the corporate name the following cases: Croft V. Day (1845) 7 Beav. 84; Hendriks v. Montagu (1881) 17 Ch. D. 638; Colonial Life v. Home and Colo- nial (1864) 33 Beav. 548; Tussaud v. Tussaud (1890) 44 Ch. D. 678; Saunders v. Sun Life [1894] 1 Ch. 537; North Cheshire v. Manchester [1899] A. C. 83. Fees and Forms. Tariff by 24. The Governor in Council may establish, alter and regu- Council. late the tariff of fees to be paid on apphcation for any letters PEES. 63 patent or supplementary letters patent under this Part, on filing Sect. 24. any document, on any certificate issued under this Act, on making any return under this Act and on the making of any search of the files of the Department of the Secretary of State •f Canada respecting a company. The amount of any fee may be varied according to the nature of the company, the amount of the capital stock, or other particulars, as the Governor in Council deems fit. 7-8 Geo. A', c. 25, s. 6. 2. No steps shall be taken in the Department of the Secre- Must be tary of State towards the issue of any letters patent or supple- fJJ'^-s^''^"" mentary letters patent under this Part, until after all fees there- issued, for are duly paid. 2 E. VII., c. 15, ss. 13 and 17. The following tariff of fees, under the provisions of Section 24 of the Companies Act, as amended by Sec- tion 6 of the Companies Act Amendment Act, 1917, has been established by Order-in-Council, P.C. 14, of Janu- ary 12, 1918: Letters Patent and Supplementary Letters Patent. When the proposed capital of the company is $50,000 or less $ lOO.OO When the proposed capital is more than $50,000 and not more than $200,000 100 . 00 and $1.00 for each $1,000 or fractional part thereof in excess of $50,000. When the proposed capital is more than $200,- 000, and not more than $500,000 250.00 and Mty cents for each $1,000 or fractional part thereof in excess of $200,000. When the proposed capital is more than $500,- 000 400.00 and twenty cents for every additional $1,000 or fractional part thereof. For letters patent to any company under Sec. 7A added to the Companies Act by Sec. 4 of the Companies Act Amendment Act, 1917 (other than a company incorporated for cliari table purposes only) 100.00 For letters patent to any company incorpor- ated for charitable purposes only (other than a war cliarity when there shall be no fee) ' 25.00 (j4 DOMINION COMPANIES ACT. Sect. 24. For letters patent to a conipaiiy iiiuler Sec. 715 added to the Companies Act by Sec. 4 of the Companies Act Amendment Act, 1917, when no amount at which shares may be sold is set ont ,in the letters patent, then the amount of each share shall be iixed at $100.00 and the fee payable shall be ac- cording to the foregoing tariff upon the capital stock calculated on the total amount of such shares either at the price set forth in the letters patent or at the fixed sum of $100.00 as the case may be. For supplementary letters patent increasing the capital of a company, the fee to be ac- cording to the foregoing tariff but on the increase only, that is, the fee to be the same as for the incorporation of a com- pany with capital equal to the increase. For supplementary letters patent changing the name of a company $50.00 For supplementary letters patent for other purposes 100 . 00 The tariff of fees under the provisions of Sec. 272 of The Companies Act for licenses to foreig-n companies to mine, shall be the same as for the incorporation of com- panies with the same authorized capital. For Filing Returns. For filing returns under Section 106 of The Companies Act as amended by Section 13 of The Companies Act Amendment Act, 1917, the fee payable upon each return shall be as follows : — When tlie capital stock of the company is $200,000 or less $ 5.00 When the capital stock of the company is more than $200,000 but not more than $500,000. 10.00 When the capital stock of the company is more than $500,000 but not more than $1,000,- 000 •• 25.00 COMMEXCEMEXT OF BUSIXESS. 65 When the capital stock is more than $1,000,000 $25.00 Sect. 24. and $1.00 on each $1,000,000 in excess of the first million but not exceeding $50.00 in aU. For filing return from a company having shares without nominal or par value the fee payable shall be calculated upon the capitalization of such company shown in such return. For filing return from a company incorporated for charitable purposes (other than a war charity when there shall be no fee) 1.00 For filing return from any company incor- porated under sec. 7A, added to the Com- panies Act by Sec. 4 of the Companies Act Amendment Act, 1917 (other than a company incorporated for charitable pur- poses only) 2.00 Certificates of Registration, Etc. For each certificate of registration or deposit of any prospectus, notice or agreement or other such document filed for that purpose under the provisions of the Companies Act or the Companies Act Amendment Act, 1917 $ 1.50 25. The Governor in Council may prescribe the forms of Forms to he proceedings and registration in respect to letters patent and prescribed bj supplementary letters patent issued under this Part, and in ('o„ncil. respect to all other matters requisite for carrying out the objects of this Part. 2 E. VIL, c. 15, s. 17. The only forms of which the writers are aware which have been prescribed by order-in-council are the forms of return under s. lOG and forms of certificates to be given by the Department under s. 69A. Commencement of Business. 26. The company shall not commence its operations or incur 'p^.n per any liability before ten per centum of its authorized capital has •■•■nt. of been subscribed and paid for. 2 E. VII., c. 15, s. 18. ''^[(^^ ^"^ ^*^ O.C.A. — .'• ()(i DOMINION rOMJ'ANlKS ACT. Sect. 26. This section does not ai)i)ly to c'oin])aiiies with shares of no par value. Tlie effect of the corresponding sectit)n in the Mani- toba Joint Stock Companies Act, R. S. M. (1902) c. 30, s. 22, Avas considered in Middownu v, German Canadian Land Co. (1909) 19 Man. L. E. 6G7. That section was identical with s. 26 and the IManitoba Act only differed in that unlike the Dominion Act it imposed no penalty on the directors of the company for a violation of its provisions. The requirement was held to be directory and not mandatory so far as it concerned dealings with strangers unaware that it had not been complied with. Cameron, J., at p. 674, in considering this section of the Dominion Act, referred to section 86 which imposes a penalty on every director authorizing the incurring of liability by the company before 10 per cent, of the capital has been subscribed and paid for. He observed, ''obviously under this act a contract entered into be- fore the commencement of operations is authorized, is not nullified. The directors are made severally liable with the company upon it. " It was furthermore held that the objection that the section had not been complied with could have been taken by the Crown alone. As to forfeiture of charter by the Crown, see note to s. 27. Apparently a share- holder could not restrain the company from commenc- ing business on the ground of non-compliance with the section. As to the rules applicable for the interpretation of a statute where its prescriptions relate to the perform- ance of a public duty, see Maxwell on Statutes, ed. 5, p. 608. In the Muldoivan Case, Pierce v. Jersey Water- works, L. R. 5 Ex. 209, was distinguished and the doc- trine of Lord Hatherly in Mahony v. East Holy ford (1875) L. R. 7 H. L. 809, at p. 894 relied on. ''No per- son dealing with them (the persons conducting the affairs of the company) has a right to suppose that has been done or can be done that is not permitted by the Articles of Association of the Company." Cameron, J., •at pp. 675-676, said "Parties dealing with the company COMMENCEMENT OF BUSINESS. 67 may presume that its internal management is regular : Sect. 26. Boyal British Bank v. Turquand, 6 E. & B. 327. The authorities and the reasoning applicable to a de facto agent or officer of a corporation are, to my mind, equally applicable to the stock subscription and pay- ment required by Section 22'." See also French Gas Saving Company v. Desbarats Advertising Agency (1912) 1 D. L. R. 136, where the directors of the company were held jointly and sever- ally liable with the company for the payment of liabili- ties arising from the commencement of business before 10 per cent, of the authorized capital had been sub- scribed and paid for under the provisions similar to this section of the Dominion Act contained in R. S. Q. (1909) Art. 6019. . There is nothing in the Act requiring payment for ten per cent, of the authorized capital to be made in cash, and doubtless any consideration which would support a plea of payment would be sufficient; see Larocque v. Beanchemin (1897) A. C. 358. The restriction contained in s. 87 of the Companies (Consolidation) Act, 1908, on the commencement of busi- ness is of a different nature to that contained in this section. Under the Imperial Act the fact that the com- pany is entitled to commence business is evidenced by certificate given by the Registrar of Companies and the section expressly provides that any contract made by a c(»ni])aiiy before the date at which it is entitled to com- mence business shall be provisional only. Accordingly cases decided under s. 87 of the Imperial Act are not applicable to this section. Tliat a company regularly formed began business before it was legally entitled to do so is no answer to a claim to put a sliareliohler on the list of contributories : Re Western Canadian Fire Insurance Company; Craig's Case (19U) 19 D. T.. R. 170. Nor did the fact that a bank, incorporated by private Act pursuant to the Bank Act R. S. C. (V.M\) c. 29, never i-eached tlir stage where it would become entitled to obtain a certifi- cate to commence business, prevent the provisional directors from allotting sliares to subscribers : Re Mon- arch Bank of Canada (1914) 32 0. L. R. 207. 6H DOMTXTOX COMPANIES ACT. Sect. 27. Forfeiture of Charter. Forfeiture 27. In case of non-user by the company of its charter 'for of chartor tin-^e consecutive years or in case the company does not so into for iion-uscr. ... i j o actual operation within three years after the charter is granted, such charter sliall bo and become forfeited. 2 E. VII., c. 15, s. 19. Forfeiture Where the Crown is imposed on by a false sugges- *em'?aUy." tlon, or wliere a grant has been made by mistake or in ignorance of some material fact, or it has granted any- thing which by law it cannot, it may, by its prerogative, repeal its own grant. And where- by several letters patent the self-same thing has been granted to several persons, the first patentee is permitted in the meantime at the suit of the Crown to repeal the subsequent letters patent. And in every case of a patent so granted which is injurious to another, the injured party is per- mitted to use the name of the Crown in a suit by scire facias for the repeal of the grant : 2 Wms. Saund. 72. And in cases where the charter of a company is de- clared by its governing statute to be forfeited on the happening of a certain event, as in s. 27, scire facias is a proper proceeding to take to have the charter annul- led. It would seem clear by the use of apt words the legislature might so limit the existence of a company that it would expire and terminate on the happening of a given event without more. Yet, where the Act simply declares that the charter shall be "forfeited," or there is a condition on the fulfilment of which the corporate powers depend, it is settled that a substantive judicial proceeding is necessary to terminate the existence of the company. Brice says of the forfeiture of charters: "The power of the Crown or the State to cancel a charter or withdraw its permission from a corporation when given in another form, for non-observance of condi- tions, remains in full vigour, and it may be exercised at any moment for the punishment of an offender. Conse- quently, where a corporation or its officers are acting contrary to the provisions of their charter, or other constating instruments, or in any other manner so as to imperil the existence of the corporation, the Courts FOEFEITUEE OF CHAKTER. 69 will, upon the request of any member, restrain such Sect. 27. acts." 3rd ed., p. 779. * ~~ In Ontario it is not necessary to resort to the courts, power to forfeit being conferred on the Lieutenant- Governor-in-Council. It may be regarded as an accepted principle that Forfeimre the question whether a corporation has forfeited its '^.^l^^ ^f franchise and ceased to exist cannot in general be raised f Canada in llie matter of tlie ai)plications by certain sliareliolders of the Dominion (-old Storage Company for a fiat for tlie institution of ])roceedings by way of scire facias to annul its charter. ^^> • DOMINION COMPANIES ACT. Sect. 27. The first petition was by Colin McArtliur, a sliare- ' lioklor in tlie company, who was also one of the original applicants for the Letters Patent of incorporation. The second petition was by George Foster and David Lowrey, who were shareholders. The reasons urged were the same in both cases. The company was incorporated by Letters Patent under the Great Seal of Canada, pursuant to the pro- visions of the Companies Act. The Letters Patent bore date 28th September, 1895. It was alleged by the petitioners that although the petition for incorporation stated that 50 per cent, of the proposed capital stock had been subscribed, and 10 per cent, paid in thereon, ■'*" o","i"^" y^^ there had been no bond fide subscription of stock, ion Cold , J T • Storage Co. and uo payments made m respect thereof ; and that although the petition stated that $15,000, being the 10 per cent, alleged to have been paid in, was standing to the credit of D. A. McCaskill and Archibald McCas- kill in trust for the company in the Molsons Bank at Montreal, yet the deposit was not made up of moneys paid in by the subscribers, but was the proceeds of a note which had been discounted by the McCaskills, pro- moters of the company, as a colorable compliance with the requirements of the Act, and that upon the Letters Patent being issued, the deposit was withdrawn by the McCaskills, and never went into the treasury of the company'. Opinion. "The application was pressed upon the above men- tioned grounds taken in the petition. From the papers on file and what was admitted at the hearing, it ap- pears that Colin McArthur did not sign the petition for incorporation personally, being at the time absent in England. He did, however, by cable expressly autho- rize his son to sign the petition for him and the son signed in his father's name. Colin McArthur appears to have returned to Canada shortly before the Letters Patent were issued, and although he seems to have written the letter to Mr. Johnson, one of the promoters of the company, on 2nd October, 1895, asking permis- sion to retire from the company, yet he does not appear FORFEITURE OF CHARTER. 77 to have taken any further steps in the matter. It is not Sect. 27. alleged that McArthur was at that time unaware of the irregularities in the incorporation of the company of which he now complains. He must or should have been aware of them. "The petitioners, George Poster and David Lowrey, subscribed for stock on or about 11th Novem- ber, 1895, and became directors of the company. It is stated by their counsel that when they became stock- holders they were ignorant of the facts set forth in their petition, that they shortly afterwards, however, ascertained those facts and thereupon resigned office as directors. It is suggested on the other side that their resignations were prompted by other motives. It is not necessary, I think, to consider the question of motive because they allowed more than a year to elapse between the date of their resignations and the institu- tion of the winding-up proceedings without taking any ^^^^j^^ut*" steps for the purpose of having the charter cancelled, fiat. and they did not during that time nor until liquidation had been pending for several months communicate their information to this office. The liabilities of the company are stated to amount to $25,000, the principal portion of which has been incurred since the resigna- tions of Foster and Lowrey from the directorate. **Tlie application for a writ of scire facias is re- sisted by the liquidator and the creditors upon the ground among others that the creditors would be em- barrassed and jjrejudiced in the collection of their claims if the charter were set aside. **The purpose of a writ of scire facias in a case of this kind is a cancellation of a company's charter. That object may, however, be brought about in effect under the winding-up Act, and proceedings under tliat Act in this particular case have been for some time pending, and have passed through several stages. It seems, therefore, that the dissolution of the company wonhl be more speedily attained by allowing the wind- ing-up suit to proceed than by instituting new proceed- ings by way of scire facias. Such n course would also 78 DOMINION COMPANIES ACT. Sect. 27. piechule the litigation and complications which would onsne if the charter were annulled by scire facias. In tlie latter event the ascertainment of the respective riglits and liabilities of promoters, stockholders and ci-editors might be a matter of considerable difficulty and uncertainty, and there can be no doubt that the remedies of creditors would not be as speedy, con- venient or fruitful as under the ordinary winding-up proceedings. Re *'It is perfectfy clear under the combined effect of ('old stor- ss. 9, 68 and 78 of the Companies Act that no advantage age Co. Q^^ ]3g taken on account of any irregularity in respect of matters preliminary to the issue of the Letters Patent unless it be in a proceeding by scire facias or otherwise for the purpose of rescinding or annulling the Letters Patent. *'It is no ground for relief in equity in the suit of a shareholder against the company tliat the charter from the Crovv'n or the grant to the company from a private person has been obtained by misrepresentation to the Crown or to such a grantor. It is for the Crown or the grantor, if either should complain of the fraud and misrepresentation, to take proceedings to set aside the charter or the grant : MacBride v. Lindsay, 9 Hare 573 ; Lindley on Companies, 5th ed., 99. ''Applications of this kind are not granted as a matter of right. They appeal to the discretion of the Attorney-General. That has been the view held by the department in the past, and it is the only view which can be acted upon consistently with the public interest : Sarazin v. The Bank of St. Hyacinthe, 20 R. L. 580; Gilmour's application against Van Home and others, 20 R. L. 590. Also the case of the Ontario (& Western Lumber Company, in which Sir Charles Hibbert Tup- per, when ISIinister of Justice, revoked the first grant in a somewhat similar case to the present. The prac- tice of the department is also in accordance with Eng- lish authorities. In Queen v. Presser, 11 Beav. 314, it is laid do\\ai by the Master of the Rolls that the At- torney-General 'conducts an action of scire facias or FORFEITURE OF CHARTER. 79 permits it to be prosecuted, according to his own jiidg- Sect. 27. ment and discretion, and may, when he thinks fit, stay the proceedings or enter a nolle 'prosequi. The control is his, subject only to the responsibilities to which every public servant is liable in the discharge of his duty, and subject to the jurisdiction which the courts may have over him, upon a charge properly brought against him for a negligent or erroneous performance of his duty. But I am of opinion that in the ordinary course of pro- ceedings, upon a writ of scire facias to repeal Letters Patent, it is within his discretion to determine upon what or upon whose information or on what terms or security he \\411 permit the action to be prosecuted; i>iscretioii and that the exercise of his discretion and the conduct liat!" ' of the action is not subject to the control of the courts in which the proceeding takes place.' Grant's Law of Corporations, p. 299; Regiua v. Hie Eastern Archi- pelago Company, 1 Ellis & Blackburn, pp. 354, 355. **I am of opinion that the discretion thus vested in the Attorney-General should not in this case be exer- cised in favor of the applicants. Apart from the ques- tion as to whether a fiat for a writ of scire facias should ^ be granted in any case with respect to a company which has ceased to do business and is in course of being- wound up pursuant to statute, T think it may be held consistently with reason and authority that where a stockholder knowing of defects or irregularities in the incorporation of a company on account of which the charter of the company may be set aside has kept silent ;ind stood l\v and taken the chance of the company's future success, wliich success could only arise through the subsequent dealings of the company with innocent persons who thereby became creditors of the company, it is too late after such liabilities have been incurred for a stockholder to set up such defects or irregularities to the prejudice of flic creditors. Especially is this so, where, as in the present case, no application is made by the stockholder until after the company has failed and gone into liquidation." (2nili January, 1898.) The fiat of the Attorney-Gene I'al may be revoked by k,.v..1uiik liim, and in the following decision of Sir Charles ITib- '"'*• 80 DOMINION COMPANIES ACT. Sect. 27. bert Tuppor, wlion Minister of Justice, in the case of TJie 0)itario and Western Lumber Co., the reasons for SO doing are fully discussed. He ontiirio ''Under the Joint Stock Companies Act the Gov- L.unber Co. ornor in Council is given a discretionary authority to grant Letters Patent. * ' The preliminary steps on the part of an applicant are laid down : — '' The petition must set fortli certain facts. ''Among other things the stock subscribed is to be specified, and the deposit upon this is to be stated. "Section 6 of the Act requires an applicant to establish 'to the satisfaction of the Secretary of State' the truth and sufficiency of the facts set forth. Section 6'5 is as follows : — " '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 Let- ters Patent, or of Letters Patent and Supplementary Letters Patent, as the case may be, under this Act; and tlie notice in the Canada Gazette of the issue of such Letters Patent, or Supplementary Letters Decision. Patent, shall be prima facie proof of all things therein contained, and on production of the Letters Patent, or Supplementary Letters Patent, or of any exempli- fication or copy thereof under the Great Seal, the fact of such notice shall be presumed; and except in any proceedings by scire facias or otherwise, for the purpose of rescinding or annulling the same, the Letters Patent, or Supplementary Letters Patent, or any exemplification or copy thereof, under the Great Seal, shall be conclusive proof of every matter and thing therein set forth." "And section 78 provides : — " 'The provisions of this Act relating to matters preliminary to the issue of Letters Patent, or Supple- mentary Letters Patent, shall be deemed directory only, and no Letters Patent, or Supplementary Letters Patent, issued under this Act, shall be held void or KEVOKING FIAT. 81 voidable on account of any irregularity in any notice Sect. 27. prescribed by this Act, or on account of the insuffi- ciency or absence of any such notice, or on account of any irregularity in respect of any matter preliminary to the issue of the Letters Patent or Supplementary Revoking Letters Patent. ' " "The follomng facts taken from the papers filed with, me on the present application are not in contro- versy : — ''Messrs. Dick & Banning, The Minnesota and On- tario Lumber Co., Messrs. Cameron & Kennedy, Messrs. Ross, Hall & Brown; The Western Lumber Co., and the Safety Bay Lumber Co., were respectively firms and corporations carrying on a general lumber business in the vicinity of Rat Portage, in the Province of Ontario. ''On or about the 29th day of April, 1893, the said firms and corporations entered into an agreement to consolidate their said businesses in a joint stock com- pany, and for that purpose in and by said agreement transferred their respective property, assets and effects to certain trustees for the company so agreed to be formed. "Pursuant to the terms of the said trust deed, the said several persons, firms and corporations mentioned herein, were incorporated pursuant to the provisions of chapter 119 of the Revised Statutes of Canada, being an Act respecting the incorporation of joint stock companies by Letters Patent known as 'The Companies Act' under the name of 'The Ontario & Western Lumber Company (Limited),' the said Letters Patent bearing date the 26th day of Sep- tember, 1893. "The applicants for the said Letters Patent consist- ing of J. A. McRae, J. M. Savage, Dennis Ryan, W. T. Creighton, W. R. Dick, Mary Banning, D. C. Cameron, H. W. Kennedy, Walter Ross, Richard Hall and Mat- ^^ ontnri,, thew Brown, and being the representatives of the said & Western several firms and corporations who, being agreed to D.C.A. 82 DOMINION COMPANIES ACT. Sect. 27. consolidate their said business as aforesaid pursuant to section 6 of the said 'Companies Act,' established to the satisfaction of the Secretary of State the sufficiency of the facts set forth in the said application and peti- tion, and had duly issued to them by the Governor in Council, Letters Patent under the Great Seal of the Dominion incorporating them as aforesaid. ''On the 5th day of October, 1893, Dennis Ryan and The Minnesota and Ontario Lumber Company issued a writ against Douglas C. Cameron, Hugh William Ken- nedy, James Malcolm Savage, Walter Ross, W. T. Creighton, John Dick, James Pringle and J. N. John- ston, Cameron & Kennedy, The Western Lumber Com- pany, The Safety Bay Lumber Company, W. R. Dick, Mary Banning, Richard Hall, Matthew Brown and John A. McRae, claiming, as shown by the statement of claim, the following relief : — "(Here follows the prayer of the Statement of Claim in Byan v. Cameron). "Issue was joined and the cause stood ready for trial. "Mr. Robinson, in his argument before me, stated that in this suit an unsuccessful application had been made to the Court for leave to add the name of the At- torney-General for Canada as a party. The Court held that it had no power to make the Attorney-General a party, consequently on the 4th June, 1894, the follow- ing petition was presented to the Right Honourable Sir John Thompson, the then Attorney-General : " (Here follows a copy of the petition presented for the fiat). "I am of opinion, after hearing argument, that this fiat as granted w^as intended to apply to the suit in which the application was made and to no other. ' ' The prayer of the petitioners was, it is true, large ?at!°'"°^ enough to cover another action, but the permission is granted to use the name of the Attorney-General of Canada herein. The petition refers to deception, illegal representations, and suppression of facts as to EEVOKING FIAT. 83 the grounds set up in the suit pending on June 4th, Sect. 27. 1894. . ~ ' ' That action had been brought to rescind an agree- ment which contemplated and was preliminary to the Letters Patent in question. The petition avers that in their action the defendants ( some of the applicants for Letters Patent) have set up as a bar to the suit the granting of the Letters. "It is further represented that the fraud and ille- gality alleged in the action thus pending cannot be established so as to obtain the desired relief without the use of the name of the Attorney-General. "So soon as his fiat was granted a further action was instituted in the name of the Attorney-General against the Ontario and "Western Lumber Co. for the purpose of cancellation of the charter. No other use was made of the Attorney-General's name. "The ground in this action is the non-compliance with the Companies Act. Irregularities and defects in the proceedings preliminary to the Letters Patent are relied on and fraud against the Statute, with allega- tions in general of fraud, collusion and deception, is averred. "At the trial the evidence appears to have been confined to the technical irregularities or to the aUeged departure from the statutory directions. Mr. Robin- son, in his argument before me, stated : — " 'Now, my learned friends complain here that in Re Ontario this section there is not a tittle of evidence of fraud; Lumbe^'co. they say that there could not be, that it was not possible for us in tliis action and under the Letters Patent, to give any evidence of the fra\ul which they tell you we are charging them with. But you have only to read that agreement to see that we charge iioiliing of the k\u<]. That has nothing to do with tiie \;ilidit>- or in- validily of tlie Letters Patent. " 'Now, wliat we complain of in tlie formation of this company is the non-payment of the ten per cent, and tlie improper subscription of stock, the non-sub- scription of stock as required by the charter.' 84 DOMINION COMPANIES ACT. Sect. 27. "Mr. Gilinour gave as a reason for instituting a separate and other proceeding than the original suit, the t'oUowing: — '' 'Another consideration was that, this fiat having been granted on the 4th June, the action of Ryan v. Cameron was set down for trial for the 21st of June, at Rat Portage, and it would have been impossible to complete the record in the new matter so as to go to trial at that date. ' ''It is insisted with force that the Companies Act has been complied with. It is argued with greater force that a substantial compliance has been made, that a strong company has been organized with vast in- terests involved, and that the present litigation is due to a misunderstanding of the promoters touching their respective interests in the company. "Without venturing to determine such points or others in dispute, I am satisfied that on the evidence before me the Attorney-General would not have allowed his name to be used for the purpose of annul- ling the charter of this company. ' ' While I do not impute bad faith on the part of the applicants, I do not think a complete statement of the material facts was disclosed to the Attorney-General. In any event I do not consider the suit of the Attorney- General V. The Ontario and Western Lumber Company was instituted with his authority. "It appears, moreover, that the Secretary of State has been satisfied within the meaning of the Companies Act after an examination of papers not now challenged as fraudulent or wilfully false. The parties who ap- plied for the fiat have, moreover, shown a readiness to cease their attack upon the charter if their own parti- cular views are met. Revoking "From what I have already said it may be neces- sary to deal with the argument that a fiat once granted should not be revoked. In the case of Queen v. Prosser (XI. Beaven, p. 813) cited by Mr. Ritchie, it is said by Lord Langdale : — fiat, REVOKIXG FIAT. 85 '' 'But the Attorney-Greneral, proceeding regularly Sect. 27. and being correct in such respects as these, conducts ^ an action of scire facias, or permits it to be prosecuted, according to his o^\^l judgment and discretion, and may, when he thinks fit, stay the proceedings or enter a nolle prosequi. The control is his, subject only to the responsibilities to which every public servant is liable in the discharge of his duty, and subject to the jurisdic- tion which the courts may have over him, upon a charge properly brought against him, for a negligent or erroneous performance of his duty.' '*It was not, however, denied in the arg-ument that I could control this suit, but it was insisted that under the circumstances I should not interfere. ''I have, it will be seen, concluded that the name of the Attorney-General is in this suit, being used mtliout warrant. Under any circumstances I cannot agree that the cases referred to, by Mr. Robinson, apply. He argued that *'ea; debito justitice" the fiat should be granted in this case. The authorities relied on by him relate to what I conceive to be a wholly different class of cases. The case of the Western Archipelago (2 El. & Bl. 556) deals with a charter of a different character from tlie one before me. In it there was a proviso f or- })idding the corporation from trading until certain things were done, that is to say, until one-half of the capital had been subscribed for, and at least $50,000 f «„9°t*'^"o l)aid up. A false certificate was given by the directors Lumber Oo. to the president of the board of trade, a certificate false to the directors' own knowledge. Martin, B., in his decision refers to the abuse and misuse of privileges conferred by the charter, and adds that for misuse or abuse a corporation may bo dissolved (in this case it must be remembered tliat the Crown was of course pressing for the dissolution). He goes on to observe, 'There is a tacit, or implied condition annexed to all such grants as the present, that they shall not be mis- used or abused, and that if they be the charter or fran- chise is forfeited.' The judge goes on to cite other cases where the condition of a charter is broken. It is 86 DOMINION COMPANIES ACT. Decision. Revoking fiat. Sect. 27. iiiiportant to note the following remarks: 'Slight de- viation from the provisions of a charter would not necessarih^ be either an abuse or a misuse of it.' '' 'Talford, J., refers to the condition being dis- obeyed by the commencement of business by the cor- poration before the payment of the stipulated sum, and by the directors certifying with conscious falsehood that such payment had been made. ' "The Dominion Salvage and Wrecking Co. v. The Attorney-General of Canada (Vol. XXI. Sup. Ct. of Canada, p. 72), was referred to. This was not the case of a charter granted under the Companies Act; it was a case where the conditions of the grant (44 Vict., c. .61) were not complied with. Though Judge Gwynne dissented in this case some of his observations are of value here. ''Now^ in the present case the company having, although not within the six months, but before enter- ing upon the operations for which they were incorpor- ated, obtained subscriptions in their stock subscrip- tion books mentioned in the fourth section to an amount in excess of $100,000 of which more than $90,000 was paid in full, and having for two years actually carried on as a company the business for carrying on which they were incorporated and having in the course of such business entered into contracts with divers per- sons by which they incurred debts which they have been unable to pay and for non-payment of which tliey have been put in liquidation under the Winding-ux) Act, a judgment now rendered to the effect that by reason of non-compliance with the provisions of the fifth section, within six months from the passing of the Act, the Act of Incorporation ceased to have any effect, and became, and is, forfeited, cannot in my opinion be maintained. Such a judgment would be fraught with such infinite mischief and such injustice to parties who (during the two years that the company did de facto carry on the operations for which they were incorpor- ated), became creditors of the company in the bond fide belief that they had de jure the existence which de facto they appear to have. CAXCELLATIOX OF CHAETER. 87 ( (' ■I am satisfied that many irregularities exist in Sect. 27.' connection with the formation of joint stock companies in Canada under the Companies Act, and it is signifi- cant that no case has been mentioned, where, in the absence of gross fraud, the Attorney-General has at- tacked a company published to the world under the great seal of Canada as a body corporate and politic and as having 'established 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 due compliance ^\ith the several conditions and terms in and by the Companies Act set forth and thereby made a condition precedent to the granting of such charter. '*To encourage attacks of the character in question upon these charters would, I conceive, be detrimental to the general business of the country. I have decided, therefore, to enter a nolle prosequi in this cause." See also Attorney-General v. Toronto Junction Cliih (1904) 8 0. L. R. 440. It is sufficient "use of the charter" under the sec- tion if the company becomes organized and stock is allotted; so in the case of an association incorporated for the purpose of constructing and maintaining a race course it was held that this need not be done in order to keep the charter alive : Hepburn v. Connaught Park (1916) 10 0. W. N. 333. As to the effect of a revocation of the certificate of incorporation under the Nova Scotia Companies Act, see The International Mining Syndicate v. Stewart (1914-15) 48 N. S. R. 172. Where an Alberta company had been struck off the register and was dissolved by virtue of the provisions of section 24 of the Companies Ordinance, it was held that the shareholders were entitled to bring in their own name a representative action to recover assets be- longing to the company; and that such assets did not vest in the Crown as bona vacantia, but belonged to the shareholders as creditors of the company <>ii its dis- solution after the jjayment of all its other obligations: Embree v. Millar (1917) 33 D. L. R. 331. 88 DOMINION COMPANIES ACT. Sect. 28. General Powers and Duties of the Company. to this Act As to real estate. Loans Property and power vested by incorpora- tion. Powers 28. All powers given to the company by letters patent or given subject supplenionlary letters patent sliall be exercised subject to the provisions and restrictions contained m this rart. 2 JBj. Vli., 0. 15, s. 20. 29. The company may acquire, hold, mortgage, sell and tonvey any real estate requisite for the carrying on of the undertaking of the company. 2. The company shall in no case make any loan to any share- liolder of the company. 3. The company shall forthwith upon incorporation under this Part, become and be vested with all property and rights, real and personal, theretofore held by it or for it under any Irust created with a view to its incorporation, and with all the powers, privileges and immunities, requisite or incidental to the carrying on of its undertaking, as if it was incorporated by a special Act of Parliament, embodying the provisions of this Part and of the letters patent and supplementary letters patent issued to such company, 2 E. VII., c. 16, ss. 21 and 70. The nature and extent of the powers of companies incorporated under acts resembling the Imperial Com- panies Act of 1862 are to be ascertained by reference to the act and the memorandum of association. Such a company is the creature exclusively of the statute and possesses only such powers as are included in the objects mentioned in the memorandum of association or are incidental or otherwise conducive to their at- tainment: Riche V. Ashhiiry Raihvay, Sc, Co. (1874) L. E. 9 Ex. 224c', Att.-Gen. v. G. E. Ry. (1879) 11 Ch. D. at p. 487. The same rule applies to companies incor- porated under special Act, such as companies incor- porated under Part II. of the Dominion Act. Any acts beyond the powers of such corporations are ultra vires and void. Companies incorporated under Part I., however, derive their existence from the act of the Sovereign by the grant of a charter from the Crown, which confers on the company 'a status resembling that of a corpora- tion at common law, subject to the restrictions which are imposed on its proceedings': Bonanza Creek Gold Mining Co. v. The Kimf) (1916), A. C. 566, at p. 582. Pre- POWEES. 89 viously to tlie last mentioned decision it was thought Sect. 29. that the same rules applied in ascertaining the powers'" of companies incorporated by charter under the Com- panies Act of the Dominion and the Acts of those of the provinces which provide for this means of incor- poration as those applicable to companies incorpor- ated under a memorandum of association. The Bon- anza Creek Case holds that the doctrine of ultra vires is not applicable to companies incorporated by charter "in the absence of statutory restriction added to what is written in the charter." "Such a company has the capacity of a natural person to acquire powers and rights. If by the terms of the charter it is prohibited from doing so, a violation of this prohibition is an Act not beyond its capacity, and is therefore not ultra vires, although such a violation may w^ell give ground for proceedings by way of scire facias for the forfei- ture of the charter," ibid, at p. 584. The specific question under consideration in the Bonanza Case was whether a company incorporated by Letters Patent under the Ontario Companies Act could acquire ab extra powers and rights outside the boundaries of the province. It was held that the com- pany which was given by its charter power inter alia to carry on the business of mining, to acquire real and personal property, including mining claims, with inci- dental powers, had no authority as of right to exercise powers outside the province of its incorporation, but that it had a status which enabled it to accept from the Dominion authorities tlie right of free mining and to lic^d the leases in the Yukon wliich were in question in tlie action. However, the judgment of Viscount Ilal- dane explicitly states that the doctrine of ultra vires does not apply to companies incorporated by charter in the absence of some restriction in its constating in- struments, and presumably the case is a decision on the powers of companies generally. The (question arises whether sub-section 3 of section 29 which states that the comi)any shall have all jiowers requisite or incidental to the carrying on of its undertaking "as if it was incor- 90 DOMINION COMPANIES ACT. Sect. 29. po rated by special Act of Parliament, embodying the provisions of this Part and of the letters patent and supplementary letters patent issued to such com- pany" impliedly cuts down tlie company's powers. Their Lordships in considering a somewhat similar provision of the Canadian Statute of 1864, 27 and 28 Vict. c. 23, which stated that every company incor- porated under that Act was to be capable of exercising all the functions of an incorporated company as if in- corporated by a special Act of Parliament, said, *' Their Lordships so construe this provision as an enabling one, and not as intended to restrict the exist- ence of the company to what can be found in the w^ords of the Act, as distinguished from the letters patent granted in accordance with its provisions." The judg- ment adds that Part I. of the Dominion Act is framed on the same principle and that when Letters Patent are granted by Section 5 they constitute the shareholders a body corporate and politic for any of the objects, with certain exceptions, to which the legislative authority of the Parliament of Canada extends. Accordingly it seems that a Dominion company has all the powers of a common law corporation. See also Palmer's Com- pany Law, 10th ed., p. 3, and the report in 79, L. J. Ch. 345 of British South Africa Co. v. De Beers, where Swinfen Eady, J., collects the authorities on the point. The earlier view adopted by the Canadian Courts was that the doctrine of ultra vires was applicable to companies incorporated by Letters Patent. Thus in Union Bank of Canada v. McKillop and Sons (1915) 51 S. C. E. 510, 24 D. L. R. 787 a guarantee given by a company so incorporated was held to be idtra vires. See also O'Neill v. London Jockeij Club (1915) 8 0. W. N. 602; Smith v. Humhervale (1915) 33 0. L. R. 452; Helwig v. Siemon (1916) 10 0. W. N. 296; Ward v. Siemon (1918) 43 0. L. R. 113; Neivhouse v. Northern Light, Poiver, dc, Co. (1914) 29 W. L. R. 249. In Hepburn v. Connaught Park Jockey Club (1916) 10 0. W. N. 333 the Letters Patent of a Dominion com- pany empowered it to acquire real estate at Ottawa for the purpose of constructing and maintaining a race POWERS. 91 course, &c., and this specific object was followed by tbe Sect. 29. general words "the operations of the company to be carried on throughout the Dominion of Canada and elsewhere." It was held follomng the case of O'Neill V. London Jockey Club (1915) 8 0. W. N. 602 that these words did not confer the right to establish a race course at any place other than Ottawa. The Appellate Division in Diehel v. Stratford Improvement Co. (1916-17) 38 0. L. R. 407, dealt with the question of the company's power to enter into the contract there under consideration as a matter of construction on the word- ing of the Ontario Companies Act. See also Re Gillies Guy, Ltd., and Laidlaw (1917-18) 13 0. W. N. 11, 57; Bank of Ottawa v. Hamilton Stove and Heater Co. (1918) 15 0. W. N. 152; (1919) 44 0. L. R. 93. A recent amendment of the Ontario Companies Act, 6 Geo. V. c. 35, s. 6, passed after the decision in the Bonanza Case, expressly confers on the companies thereby affected "the general capacity which the com- mon law ordinarily attaches to corporations created by charter." The recent judgment of the Ontario Su- preme Court, Appellate Division, in Edwards v. Blackmore (1918) 42 0. L. R. 105, 42 D. L. R. 280, while decided in reference to a company governed by the above mentioned statutory provision, fol- lowed the Bonanza Case and is applicable to all com- panies incorporated by Letters Patent. This was an appeal from a judgment of Masten, J., who held that the doctrine of idtra vires did not apply to an Ontario company created by charter. Ferguson, J. A., and Lennox, J., affirmed the decision appealed from on this ground; Rose, J., on the ground that the contract was intra vires, having regard to the company's powers under its charter and its incidental powers under the Act, while Meredith, C. J. C. P., dissented. The follow- ing propositions are laid down by Ferguson, J. A. : "A corporation created by charter liad at common law almost unlimited capacity to contract, and . . . statements in the charter defining tlie objects of incor- l^oration do not take away that unlimited capacity, and . . . even express restrictions in the charter do not f)-' DOMINION COMPANIES ACT. Sect. 29. take it away, but are simply treated as a declaration of the Crown's pleasure in reference to the purposes beyond which the capacity of the corporation is not to be exercised, a breach of which declaration gives to the Crown a right to annul the charter" (at ])p. 116 and 117 of tlie report in 0. L. R.)', ''The enumeration in the charter of the objects for which the company is incorporated cannot be con- sidered as a declaration that the company shall not do things other than those particularly set out, but . . . it requires at least express words of restriction in the charter, or the statute, to confine operations of the com- pany, or even to confer upon a person aggrieved the right to apply to scire facias proceedings to cancel the charter" (at p. 118 of the report in 0. L. R.). See also on powers of companies Temiskaming Telephone Co. v. Town of Cobalt (1919) 44 0. L. R. 366, reversed, Toivn of Cobalt v. Temiskaming Tele- phone Co. (1919), 49 S. C. R. 93, restoring judgment in (1918) 42 0. L. R. 385. It remains to consider, if there is a statutory re- striction in the governing act, e.g., where the company is forbidden to make loans to shareholders (s. 29 (2)), whether an act of the company in violation of such restriction is binding on the company. In this connection a distinction has been drawn between powers vested in a company by reason of the fact of its incorporation by an act of the Sovereign, such as the capacity to bind itself by its contracts, and powers which are the creation of the governing act, such as the power to increase or decrease the capital stock or issue preference shares or issue share war- rants. There appears to be no doubt that powers' of the latter class can only be exercised in the manner and to the extent and subject to the conditions provided in the governing act. The enjoyment of powers of both classes by the Company would be ''subject to the re- strictions which are imposed on its proceedings" by statute. In the case of powers of both classes, i.e., whether arising out of general corporate capacity or arising out of express statutory enactment, there is POWERS. 93 no doubt that an exercise of the power in contra- Sect. 29. vention of the statute is ineffective. Whether this is on ~ the ground of ultra vires or illegality makes no differ- ence in the practical result. See Henderson v. Strang (1919) 44 0. L. R. 617; (1919) 45 0. L. R. 215. This case has been appealed to the Supreme Court of Canada. See further Machen on Corporations, sections 1022-1025: Copper Mines y. Fox (1851) 16 Q. B. 229; Ayers v. South Australian Sc, Co., (1871) L. R. 3 P. C. 548; Elve v. Boijnton (1891) 1 Ch. 501. The following conclusions may be stated. — Summary. 1. A company incorporated by charter under Part I has the general capacity of a common law corpora- tion. 2. Exj^ress restrictions in the charter do not re- move that capacity, but give the Crown a right to annul the charter for a breach of the restriction ; and may possibly give a person aggrieved the right to apply by scire facias proceeding to annul the charter. 3. If there is an express restriction or prohibition in the governing act it must be complied with or observed under pain of nullity. Acts of a company quite apart from their being prohibited by the charter, may be illegal as being con- trary to public policy or forbidden by law. A coni- *pany coukl not, for example, purchase land for the purpose of a lottery scheme : Prevost v. Bedarcl (1915) 51 S. C. R. 149. The act itself expressly confers a number of powers which may briefly be summarized as follows: — Incidental powers, ss. 5 and 29. Power to apply for the change of the company's name, s. 21. Power to estal)lish offices and agencies, s. 30. The right to apply for and obtain supplemontnw letters patent, s. 34. i^-i DOMINION COMPANIES ACT. Sect. 29. Power to purchase fractions of shares for the purpose of consolidation, s. 51 (2). The right to maintain actions between the company and any shareholder, s. 99. lutorpreta- Certain other powers and rights are conferred by the Interpretation Act, R. S. C. (190G) c. 1, s. 30, which is as follows : — *'In every Act, unless a contrary intention ap- pears, words making any association or number of persons a corporation or body politic and corporate shall, — (a) vest in such corporation power to sue and be sued, to contract, and be contracted with, by their cor- porate name, to have a common seal, to alter or change the same at tteir pleasure, to have perpetual succes- sion, to acquire and hold personal property or mov- ables for the purposes for which the corporation is constituted, and to alienate the same at pleasure ; and, (b) vest in a majority of the members of the cor- poration the power to bind the others by their acts; and, (c) exempt individual members of the corporation from personal liability for its debts or obligations or acts, if they do not violate the provisions of the Act incorporating them. 2. No corporation shall be deemed to be autborized to carry on the business of banking unless such power is expressly conferred upon it by the Act creating such corporation." As to powers ''necessarily and inseparably inci- dent to every corporation" such as the power to sue and be sued, see Powell-Rees Ltd. v. Anglo Canadian Mortgage Corporation (1912) 26 0. L. R. 490, at p. 493. Directors' The act gives the directors power to pass by-laws with reference to the following matters: — creation of preference shares, s. 47; consolidation of shares, s. 51; increase of capital, s. 52; reduction of capital, s. 54; the borrowing of money, s. 69; allotment of stock, calls, share certificates, forfeiture of stock, transfer RESTRICTIONS. 95 of stock, dividends, qualification and remuneration Sect. 29. of directors, appointment of agents, officers and ser-' vants, meetings, penalties, and the conduct of the affairs of the company, s. 80. The directors may also repeal, amend and re-enact by-laws, s. 81. Restrictions. The Act contains a number of restrictions to which Restric- companies incorporated under it are subject: — 1. Before a company may commence its opera- tions or incur any liability, it is required by section 26 that 10 per cent, of its authorized capital shall have been subscribed and paid for. See however, the note to that section. 2. Powers given by the letters patent shall be exer- cised, subject to the restrictions and provisions of Part I. of the Act. 3. The company may not use its funds in the purchase of stock or other companies until a by-law has been passed in conformity with section 44. 4. No dividend shall be passed wliich will impair the capital of the company, s. 70. 5. Loans to shareholders are forbidden, s. 29 (2). If this prohibition is contravened the loan is ultra vires, and an objecting shareholder is entitled to a decree directing the restoration of the money to the company: Henderson v. Strang (1919) 43 0. L. R. 617; (1919) 45 0. L. R. 215 ; under appeal to Supreme Court of Canada. But a loan to a firm of which the shareholder is a member is not within the prohibition, at any rate where the firm l\v tlic law of its domicil is a legal entity, separate from the individuals who compose it, ibid. Exercise of powers. Where a comi)any has permissive powers whlcli are capable of being e.\ercised without the creation of a nuisance and which are conferred without provision being made for compensating persons injured by their exercise, they must be used so as not to create a nui- sance: Hopkins V. Hamilton Electric (1910) 2 0. L. R. 9(3 DOMINION COMPANIES ACT, Sect. 29. 240. The general rule ol' law is that if the thing coniphiined of, althougli an act which would otherwise be actionable, be authorized by statute, then no action will lie in respect of it, if it be the very thing the legislature has authorized. If it be not the very thing authorized an action will lie : FieldJiouse v. City of Toronto (1919) 43 0. L. R. 491 (App. Div.) where the authorities are collected. See also Leighton V. B. C. Electric Co. (1914) 17 D. L. R. 117; (1914) 18 D. L. R. 505 and cases cited. Delegation Powcrs granted to a corporation by charter can- tlm^of^^^^' ^^^^^ ^® delegated or transmitted: Sandivich Windsor powers. Sc. Ry. v. City of Windsor (1917-18) 13 0. W. N. 336, and cases cited. Powers conferred and duties imposed by the Legislature on log driving companies cannot be dele- gated or transferred and no action is maintainable on a contract based on such a transfer : Lynch v. William Richardes Company (1905-8) 38 N. B. R. 160. A company cannot by resolution delegate to the president or other officer the powers vested by law in the directors: Twin City Oil Co. v. Christie (1909) 18 0. L. R. 324. It is only ministerial acts or acts of administration merelj^ that can be delegated, and not the discretion- ary powers of the board of directors: Tanguay v. Royal Paper Mills (1907) Q. R. 31 S. C. 397. Provincial legislation affecting Dominion companies. It is established that Provincial legislatures may to a certain extent enact laws for the regulation, tax- ation, and licensing of Dominion Companies. The ques- tion of the legality of the various provisions in force in the different provinces is beyond the scope of this note in which some of the more recent decisions only and principles therein laid down are referred to. Legislation excluding Dominion corporations, be- cause not registered or licensed (where a license may be refused) from resorting to the provincial courts to enforce contracts made in pursuance of the powers granted by their charter are idtra vires: John Deere pro\t:xcial legislation. 97 Plow Co. Ltd. V. Wharton (1915) 84 L. J. P. C. G4; Sect. 29. (1915) A. C. 330; 19 D. L. R. 353; Linde Canadian Refrigerator Co. v. SaskatcJieivan Creamery Co. (1915) 51 S. C. R. 400, 403. A province can not interfere with the status and corporate capacity of a Dominion company in so far as that status and capacity carries with it powers conferred by the Par- liament of Canada to carry on business in every part of the Dominion: John Deere Ploiv Co., Ltd. V. Wharton, supra. On the other hand the Lord Chancellor said "It is true that even when a com- subject to pany has been incorporated by the Dominion Gov- provincial ernment with powers to trade, it is not the less subject general to provincial laws of general application enacted under "pp'^'^'^^^io"- thejpowers conferred by s. 92. Thus, notwithstanding that a Dominion company has capacity to hold land, it cannot refuse to obey the statutes of the province as to mortmain, Colonial Building and Investment Association v. Att.-Gen. of Quebec (53 L. J. P. C. 27; 9 App. Cas. 157) ; or escape the payment of taxes, even Taxes, though these may assume the form of requiring, as the method of raising a revenue, a license to trade License. which affects a Dominion company in common with other companies. Bank of Toronto v. Lambc (56 L. J. P. C. 81 ; 12 App. Cas. 757). Again such a company is subject to the powers of the Province relating to property and civil rights under Section 92 for the regulation of contracts generallv, Citizen Insurance Co. V. Parsons (51 L. J. P. C. 11 ; 7 App. Cas. 96)." Their Lordships refrained from stating any gen- ci-al principles beyond observing that it might be com- petent to a legislature "to ])ass laws apjjlying to companies without distinction, and requiring those which were not incorporated witliiii the province to susKi'sted register for certain limited i)urposes, such as the fur- I'lg-^'iaTion. nishing of iiifoi'ination;" also "to enact that any com- pany which had not an office and assets within the province should under a statute of general ap})lication regulating procedure, give security for costs." Since the above decision it has been held that the Snskatche- provisions of the Companies Act (1915) Sask., which wiin. n.t.A. — ( i)8 DOMIXTOX COMPANIES ACT. Prill 00 Edward Island. Manitoba. Ontario, Sect. 29. HHiuiros all coiiipaiiios to register and take out an animal license, are intra vires and are applicable to Doiiiinioii companies: Harmer v. Macdonald Co. Ltd. (1917) 33 D. L. R. 363; (1919) 59 S. C. R. 45. It is understood that an appeal is being taken to the Judi- cial Committee of the Privy Council. The Prince Edward Island Act of 1913, requiring a sworn statement to be filed by every company not incorporated by or under the authority of an Act of the Legislature of Prince Edward Island, carrying on business in Prince Edward Island and having gain for its purpose or object, is intra vires, and a contract entered into by a company which has not complied therewith is void: Willett Martin Co. v. Full (1915) 24 D. L. R. 672. In Davidson v. Great West Saddlery Co. (1917) 35 D. L. R. 526 ; (1919) 59 S. C. R. 45, it was held that a Province has power under s. 92, of the B. N. A. Act to compel under penalty, a Dominion company to take out a license as a condition precedent to carrying on business and holding lands within its territory, and that Part iv. of the Manitoba Companies ' Act, R. S. M. (1913) Ch. 35 is intra vires. This case is under appeal to the Judicial Committee of the Privy Council. In Currie v. Harris Lithographing Co. (1918) 41 J). L. R. 227; 41 0. L. R. 475*, the Supreme Court of Ontario, Appellate Division, held that the provisions of the Extra-Provincial Corporations Act R. S. 0. 1914, c. 179, except the latter part of s. 16 (1) are intra vires so far as they apply to a company incor- [)orated under the Dominion Companies Act, R. S. C. c. 129 (1906) carrying on business in Ontario, and with its chief place of business in Ontario. Such company is precluded from carrying out its objects and under- takings in Ontario until it becomes licensed; it is sub- ject to the penalties prescribed in the Act for carrying on business, and is prohibited from holding lands for the purposes of its business ^vithout being licensed under the Act. That part of s. 16 which provides that so long as a company remains unlicensed it shall not be capable of PRO^^XCIAL LEGISLATION. 99 maintaining any action or other proceeding in any Sect. 29. court in Ontario in respect of any contract made in" whole or in part within Ontario in the course of or in connection with, business carried on in contravention of the provisions of Sec. 7 was held ultra vires. It was also held that a Dominion company is sub- ject to and bound to obey the statutes of the province as to Mortmain. The words ''of a statute for the time being in force ' ' contained in s. 3 of the Mortmain and Charitable Uses Act, R. S. O. c. 103, apply only to a statute of the. Province, and the words ''His Majesty" where the first occur in the section mean His Majesty so acting by the Lieutenant Governor of the Province, and where they occur the second time mean His Majesty in right of the province. The Act is an Act of general application. The above case is also under appeal. Where a Dominion trust company has applied for a license and as a term of receiving it has given a bond, neither the company nor the surety can attack the validity of the bond on the ground that the com- pany could have done business in the province without a license : A. G. for Ontario v. Raihvay Passengers As- surance Co. (1918) 43 0. L. R. 108 (App. Div.). A Dominion company is, in common with other companies, firms and persons engaged in similar busi- ness, liable to i)ay a license tax imposed by a munici- pality: Be Major Hill Taxicah Co. v. Citfi of Ottaiva (1915) 70. W. X. 747. Ill Re Dominion Marble Co. In Liquidation (1917) Quebec. 35 I). L. K. f5'>, it was held that a Dominion com])any is suljjcct to tlie limitation that in carrying out its objects it must comply witii the law relating to pro- perty and civil rights in each of the provinces. As a result it was held that the company in rKinidatioii had no authority to create in favour of a trustee lor bond holders, a privilege upon its movable ])roperty in view of the h)Ciil hiw ill force in the Province of Quebec, making movables insusceptible of hypothecation. By an anicndincnt to tlie Quebec Companies Act (1914) 100 DOMINION COMPANIES ACT. Sect. 29. -4 (Jeo. V. Cli. 51, authority is now given for the pledg- iiig and mortgaging of movable property to secure bonds, and authorizing such pledges or mortgages. Statutory Corporations. The rule that companies incorporated by charter have all the powers of a natural person does not apply to companies incorporated under Part II. of the Act, which are statutory companies. To these the doctrine of ultima vires applies. Moreover, if the law rests as declared in Edivards v. Blackmore, legislative steps will doubtless promptly be taken to restrict the powers of companies to those set out in the letters patent supplemented by the powers conferred by the govern- ing act itself. Accordingly a statement of the prin- ciples of the doctrine of ultra vires is given below. Principles applicable in determining extent of powers. The method to be adopted for ascertaining whether any given act is intra vires or not is stated in Atty.- Gen. V. Mersey Raihuay (1907) 1 Ch. 81, at page 99, to be as follow^s: '' The main purpose must first be ascertained; then the special powers for effectuating that purpose must be looked for; and then if the act is not within either the main purpose or the special powders expressly given by the Statute, the enquiry remains whether the act is incidental to or consequen- tial upon the main purpose and is a thing reasonably to be done for effectuating it." The case was reversed in (1907) A. C. 415, but the above statement by Buck- ley, L.J., was not dissented from. To the above rules of construction must be added the "primary object" rule which is that where the objects of a company set forth a number of powers the paragraphs containing the main or dominant ob- jects must first be looked at and all other clauses are to be regarded as merely ancillary to the main object and not as conferring independent powers : German Date Coffee Company (1882) 20 Ch. D. 169. It has been held in England that this rule applies even though the memorandum of association expressly EFFECT OF ULTRA VIEES ACTS. 101 states that each paragraph is to be read separately Sect. 29. and not restricted by any other paragraph: Stephens V. Mysore Reefs, {Kangundy) Wlining Co. (1902) 1 Ch. 745. But see Butler v. Northern Territories Mines of Australia (1907) 96 L. T. 41, which decided that the primary object rule, being only of prima facie applica- tion, may be expressly excluded by the terms of the memorandum of association; and see Cotman v. Broug- ham (1918) A. C. 514. It appears in every case to be a question of con- struction based upon a consideration of the whole memorandum of association or charter. Effect of ultra vires Acts. Ultra vires Acts are void and cannot be ratified. An Act which is clearly beyond the powers given to a company by its instrument of incorporation can- not be ratified even by the unanimous resolution of all the shareholders: Ashhury v. Riclie (1875) L. R. 7 H. L. 653. Such an act being ultra vires, is null and void. In this case Lord Cairns at page 672 points out the necessity of carefully distinguishing between an illegal act and an act which is ultra vires, in dealing with the powers of companies. He says, "The ques- tion is not as to the legality of the contract ; the ques- tion is as to the competency and power of the company to make the contract." It lias been held further that a judgment by con- sent or by way or compromise against a corporation to enforce an ultra vires agreement is void, being of no more effect than the contract itself: G. N. W. C. Ry. Co. V. Charlehois (1899) A. C. 114 and see Re Neiv Zealand Land Company, Jackson's Case (1888) 6. N. Z. I.. \{. (S. C.) 549. See also' Hughes v. Northern Electric and Manufacturing Co., Limited (1915) 50 S. C. R. 626. A company will not be estopped by deed or other- wise from showing that the act which it purports to have done, or the contract which it is alleged to have made, was beyond its corporate powers, and is, there- fore, a nullity as regards tlie company : Baroyiess Wen- 102 i)():\rT\Tox companies act. Sect. 29. Jock- V. Bircr Dee Co. (1887) 36 Cli. I), (uf)!!, 10 App. - Cas. 354; Ex parte Watson (1888) 21 Q. B. 1). 301, at p. 302. And persons who deal with the company cannot hold it liable for an atteni])ted exei-cise of powers which it does not possess: Balfour v. Ernest (1859) 5 C. B. N. S. 601; Mahom/ v. East Holy- ford, dc, Co. (1875) L. R. 7 H. L. 869. This prin- ciple does not apply, however, where the act in question is not outside of the powers of the company altogether, but is one which has been performed with- out the observance of some formality which is a mere matter of internal management: County of Gloucester Bank v. Biidry, dec, Co. (1895) 1 Ch. 629; Mahony v. East Holyford Co., supra, and Boyal British Bank v. Turquahd (1855) 5 E. & B. 248 and 6 ib. 327. In such case it will be assumed that the necessary require- ments have been observed: Colonial Bank of Austral- asia V. Willan (1874) L. E. 5 P. C. 417, and the cases just cited above, and it is not incumbent on the person dealing with the company to ascertain that all its pro- ceedings have been regular, ibid. But, although the company cannot be held to a contract which is ultra vires of it, a remedy may exist against the directors who induced the contract: Weeks v. Propert (1873) L. R. 8 C. P. 427; Looker v. Wrigley (1882) 9 Q. B. D. 397. See also on estoppel annotation in (1917) 36 D. L. R. 107. The effect of the rule that a company cannot be bound in respect of ultra vires acts is cut down by two remedies which a person may exercise who deals with a company in ignorance of the fact that it is exceeding its powers. (1) Such person may be entitled to sue the directors on an implied warranty of authority on their part to bind the company. (2) In case of a loan he may be entitled to be subro- gated to the rights of creditors who have been paid off out of the proceeds of his loan. Implied Implied Warranty. — If directors represent that warran y. ^^^^^ havc authority to enter into a transaction, where as a matter of fact they have not, and the party to INCIDENTAL POWERS. 103 whom the representation is made, acting upon it, in- Sect. 29. curs loss, he may sue the directors for damages : Fir- ~" banks Executors v. Humphreys, 18 Q. B. D. 54; White- haven Joint Stock Bank v. Reed (1886) 54 L. T. 360 C. A. Quasi-suhrogation. — In the case of an ultra vires Qmasi-subro- borrowing by a company, the lender has no right of ^'^'^^°^- action against the company in respect of the contract of loan itself. Nor can he enforce any securities given for such loan. However, if the money has not been spent by the company he is entitled to prevent the com- pany from parting with it ; and further, if the money advanced has been expended in paying the lawful enforceable debts of the company he is entitled to stand in the shoes of the creditors so paid off, but he is not entitled to the benefit of such securities as the creditors may have held in respect of their debts: Blackburn Benefit Building Society v. Cunliffe Brooks, (1882) 22 Ch. D. 61; (1884) 9 App. Cas. 857. See also Royal Bank v. B. C. Accident (1917) 35 D. L. R. 650; Sinclair v. Brougham (1914) A. C. 398. It is immaterial whether the debts were in existence at the time of the advance or not : Baroness Wenlock v. River Dee (1887) 19 Q. B. D. 155. Incidental Powers of Companies. Dicta will be found in many cases to indicate that a company possesses certain powers in virtue of its being a corporate body, e.g., a power bona fide to com- promise any dispute whatever is incident to the legal existence of the persona of a body corporate, per James, L.J., in BatVs Case (1878) 8 Ch. D. 334; see also Powell Rees v. Anglo Canadian Mortgage Cor- poration (1912) 26 0. L.R., at page 493. It is doubt- ful, however, whether too much reliance should be placed upon such expressions of judicial opinion as a different principle is clearly enunciated in AsJibxry, etc., Railway Co. v. Riche (1875) L. R. 7 H. L. 653, and thf ti-ue i)rinciple would seem to be that the possession of incidental. powers by a company,- or powers not specifically mentioned in the instrument of creation, 1(U DOMINION COMPANIES ACT. Sect. 29. iloponds not on its being a corporate body, but on its ' Iiavini:: implied power to do ''whatever is fairly and reasonably necessary to effectuate its specified ob- jects." It is not possible to state in regard to any given company incorporated for the purpose of engaging in certain specified undertakings, just what powers it possesses other than those expressly given it. The words ''All the powers, privileges and immunities necessary for the carrying on of its undertaking" or similar words occurring in almost all companies acts are very wide. It is a matter of construction in every case to determine whether or not a certain power is intra vires of the company under consideration when such power has not been specifically mentioned in its charter or other instrument of creation; and in con- struing such instrument the ordinary rules of construc- tion usually applied in interpreting written documents should be followed, per Selwyn, L.J., in Re Interna- tional Contract Co. (1869) 17 W. R. 454, at p. 459; 20. L. T. 96, at p. 100; to which may be added the words of Davey, J., in New Zealand, &g., Co. v. Peacock (1894) 1 Q. B. 622, at p. 632, "The memorandum ought to be read fairly and not so as to make this scheme ultra vires if it is otherwise unobjectionable." See also Union Bank of Canada v. McKillop (1914) 30 0. L. R. 87, at page 98. In Williams v. Crawford Tug Co. (1907) 16 0. L .R. 245, it was held that a tug company had no implied power to guarantee the price of a boiler to be purchased by the tug owner employed by the company; see also Carter v. Columbia Bitidithic Co. (1914) 18 D. L. R. 520; Re Pengelly-Akitt, Ltd., Jac- ques Case (1914) 16 D. L. R. 79, but see A. E. Thomas, Ltd. V. Standard Bank (1909-10) 1 0. W. N. 379 and 548, where under the circumstances in question the power to guarantee was implied. In Union Bank of Canada v. McKillop (1914) 30 0. L. R. 87 and affirmed (1915) 51 S. C. R. 518, the de- fendant was a company incorporated under the On- tario Companies Act, R. S. 0. (LS97) c. 191 with power POWERS. 105 to buy, sell and deal in timber and lumber, operate saw Sect. 29. mills, etc. The giving of a guarantee for a debt of a company wliose sole connection with the guarantor was that of a customer was held to be ultra vires. But where the company's powers authorize it to ''guaran- tee the contracts of or otherwise assist" any company carrying on any business which the guaranteeing com- pany is authorized to engage in, a guarantee by the latter of the account of a company carrying on such business is intra vires: Bank of Ottaiva v. Hamilton Stove and Heater Co. (1919) 44 0. L. R. 93. The following reported decisions afford further illustrations of the application of the foregoing prin- ciples in specific cases : — To Make Contracts. For the general rule see judgment of Gwynne, J., in Hovey v. Whiting (1886) 14 S. C. R. 515, at p. 531. A company may not assign all its rights and powers absolutely: Atty-Gen. v. The Niagara Falls Interna- tional Bridge Co. (1873) 20 Gr. 34. But a railway company may lease a portion of its road to another company and assign all its rights and privileges as to the portion so leased: Michigan Central Ry. Co. v. Wealleans (1894) 24 S. C. R. 309, but see Hinckley v. Gilder sleeve (1872) 19 Gr. 212, and see also Montreal Telegraph Co. v. Law (1883) 27 L. C. Jurist 257, at p. 277. Distinction between contracts executed and con- tracts executory: The Garland Manufacturing Co. v. The Northumberland Paper and Electric Co., Limited (1900) :'.l O. R. 40. See Young v. Bank of Nova Scotia (1915) 34 0. L. R. 176. Where directors had bought goods on the credit of the company wliicli by the act of incorporation it li.ul no power to buy, tliey were held not lial)le on a war- ranty of authority or otlierwise, the representation being one of law and not of fact: Strnthers v. Macken- zie (1897) 28 0. R. 381. lOG DU.MINION COMPANIES ACT. Sect. 29. Soo also Great Western Bailway Co. v. Preston and Bcrfni Co. (1857) 17 U. C. R. 477; Calvin v. The Pro- viucial Insurance Co. (1869) 20 U. C. C. P. 267; Ber- ■nard'in v. Municipality of North Dufferin (1891) 19 S. C. K. 581 ; Fairchild v. Ferguson (1892) 21 S. C. R. 484; Charlehois v. Delap (1895) 26 S. C. R. 221. A power by statute or cliarter purporting to autho- rize a company to sell its undertaking does not alone without express words give a power to sell for shares in another company : Hill v. Starr Manufacturing Com- pany (1914) 15 D. L. R. 146. The powder to dispose of lands carries with it the power to lease: Dominion Cotton ]\lills v. Amyot (1912) 4D. L. R. 306. To Borrow Money and to Mortgage. To borrow A compauy authorized to borrow and to mortgage to mortgage. Can take a bond as additional security for money over- due upon it : Hope v. Glass (1863) 23'u. C. R. 86. Where the terms upon which money is borrowed or a mortgage given by a company are not illegal it is within its powers to pay a bonus for the accommoda- tion obtained: Farrell v. The Caribou Gold Mining Co. (1897) 30 N. S. R. 199. Directors of a company were authorized to execute a mortgage to parties who had agreed to advance the sum of $30,000 to enable the company to acquire cer- tain mining property which they desired to purchase, and to include in such mortgage bonuses amounting in all to $10,000. Held, that the company being a trading corporation, liad as such, power to borrow money and to mortgage, and that as long as the terms upon which the money was borrowed, and the mortgage given, were not illegal, there could be no objection to paying a bonus for the accommodation obtained: Farrell v. The Caribou Gold Mining Co. (1897) 30 N. S. R. 190. The power to borrow money implies the power to mortgage. Directors of a company incorporated under the Act of 1852, c. 2 (Rev. Stats. N.S., 3rd Series, 750) have power to mortgage the property of the com- pany to discharge obligations for which the sharehold- POWERS. 107 ers are liable, and would continue personally liable if Sect. 29. there was no mortgage : In re Nash Brick and Pottery Manufacturing Co. (1873) 3 N. S. R. 254. A company which has power to advance moneys on Lend on mortgage securities has power to do everything neces- mortgage. sary to protect such security or to realize upon it, and if the company is a second mortgagee it has power by implication to do those things which might result from the working out of the relation subsisting between first and second mortgagees, such as a power to redeem the first mortgage. And if' such a company take a mort- gage upon leasehold property it may pay the rents reserved in order to avoid a forfeiture, and may also pay the proper expenses of maintaining and working the property where its productiveness is thus attained : Sheffield, &c., Society v. Aidewood (1889) 44 Ch. D. 412. See also Western Assurance Co. v. Taylor (1862) 9 Gr. 471; Reid v. Whitehead (1864) 10 Gr. 446; The Corporation of North Givillimbury v. Moore (1865) 15 U. C. C. P. 445; Edinburgh Life Assurance Co. v. Graham (1860) 19 U. C. L. R. 581; Victoria Mutual Fire Insurance Co. v. Thompson (1882) 32 U. C. C. P. 476; 9 A. R. Q20;Sheppard v. Bonanza, dc, Co. (1894) 25 0. R. 305; Boyal Bank v. B. C. Accident (1917) 35 D. L. R. 650. When one of the objects for which the company is incorporated is to acquire, sell and dispose of lands of a certain description the company has power to give a mortgage as security for purchase money and to give a covenant therein to pay such purchase money: Sheppard v. Bonanza Nickel Co. (1894) 25 (). R. 305; see also Kirk pat rick v. Cormrall Electric Railway Co., Ltd. (1901 ) 2 0. L. R. 1 13. This was a case of an elec- tric street railway company incoryjorated under the Ontai-io Joint Stock Companies Letters Patent Act, R. S. D. (1887) c. 157, wliich gave the directors power to borrow money upon the credit of the company under the sanction of a ])y-]MW of tlie sliareholdcrs ; and under the like sanction to liypothecatc mortgage or pledge lOS DOMINION COMPANIES ACT. Sect. 29. To pay interest. To lend money. tlio real or ])ersoiial property of tlio company to secure any snni or snins borrowed for the purposes thereof. It was hekl that this section did not restrict the power of inorti>'aii'ino- to the existing property of the com- pany; i^er Oskn-, ,T.A., at page 117, "There is nothing in the act which expressly or by implication restricts the exercise of the power to its then existing property. In this respect it seems to me that the company is in- vested with as large powers to mortgage its ordinary after acquired property as belongs to an individual person." See also Perth Flax and Cordage Co. (1909) 13 0. W. R. 1140. To Pay Interest. In an action for the interest on bonds issued by a company under 37 Vict. cap. 57 (Que.), the defendants pleaded that the Legislature could not enact a law authorizing th(; company to enter into any contract binding on it by which a rate of interest higher than six per cent, was to be paid, and the coupons being at the rate of seven per cent, the obligation was void, or at most good only for six per cent. It was held, how- ever, that the company being authorized to borrow could legally agree to pay seven per cent, or such other rate as might be specially agreed upon : Macdougall v. Montreal Warehousing Co. (1880) 3 L. N. 64. Corporations other than banks may validly lend at any stipulated rate of interest : Royal Canadian Insur- ance Co. V. Montreal Warehousing Co. (1880) S. C. 3 L. N. 155; McHugh v. Union Bank of Canada (1913) A. C. 299. To Lend Money. The power to loan is a common power to be in- serted, and its omission from the memorandum of a trading company is significant. Thus where there was no express power to loan it was held that a company incorporated to carry on a general contracting busi- ness had no implied power to make a loan to another company, and that a chattel mortgage taken therefor was invalid: Columbia Bitulithic Co. v. Vancouver POWEKS. 109 Lumber Co. (1914) 20 D. L. R. 954; (1915) 21 D. L. R. Sect. 29. 91. The company might have the right to sue for the return of the money, ihid. To Issue Shares at a Discount. Without being especially empowered to do so a com- pany cannot make allotments of its capital stock at a rate per share below the face value : Northwest Elec- tric Co. V. Walsh (1898) 29 S. C. R. 33; Re Clinton Thresher Co. (1910) 20 0. L. R. 555. It is ultra vires to issue fractions of a share: McGill Chair Company {Munro's Case) (1912) 26 0. L. R. 254. A company incorporated under the Manitoba Act was held to have no power to bargain away paid up shares for a mere covenant or agreement to do certain future acts as to which upon non-performance the company's right would be to damages only: Winnipeg Hedge and Wire Fence Co., Limited (1912) 1 D. L. R. 316, Jones and Moore Electric, 18 Man. L. R. 549, followed {sed queer e). A company after it has improperly issued shares at a discount has no power to cancel them: McGill Chair Compamj, Munro's Case (1912) 26 0. L. R. 254. If, however, certificates have not been issued and the contract to take shares is still executory a resolution may be passed cancelling them: Re Matthew Guy Car- riage and Automobile, Thomas's Case (1912) 3 0. W. N. 902. While a company may not issue its shares at a dis- count there is no rule which absolutely prevents direc- tors representing the company from selling shares at par where they are at a premium on tlie market: Harris v. Sumner (1908) 5 K. L. K. Kil. To Acquire, Hold and Dispose of Land. Tliis power is expressly covered by Section 29. Apart from the Act the law is as follows : A company empowered to hold land for a diiiiiitc purpose only may take a conveyance of land for an- other purpose, an^ the Crown alone can take advantage 110 DOMINION OOAIl'AN'lKS ACT. Sect. 29. of the disability, and the company can convey its de- feasible title: Bechcr v. Wood^ (IHOr)) 16 U. C. C. P. Hold and 29;McDiarniid v. Hughes (1888) 16 0. R. 570. So also soli land. if -1 company has power to hold land for a delinite period only, without any provision as to reverter, and holds beyond that period, the Crown alone can take advantage of it : McDiarmid v. Hughes, and this case is authoritv for saving that in Ontario, at all events, though the Statutes of Mortmain have been held to be in force in that Province, the position is the same though the company has not been empowered to hold lands at all, if it has not been expressly prohibited from doing so. An insurance company had power to hold real estate for the immediate accommodation of the com- pany ''or such as shall have been bona fide mortgaged to it by way of security, or conveyed to it in satisfac- tion of debts previously contracted in the course of its dealing." It had also power to invest its funds in mortgages of real estate. The company sold a vessel and took from its vendee mortgages on real estate for securing the purchase money. It was held that this transaction was intra vires: Western Assurance Co. V. Taylor (1862) 9 Gr. 471. Only the Crown can take advantage of the forfei- ture which a company incurs by holding land when not empowered to do so: McDiarmid v. Hughes (1888) 16 0. R. 570. A company incorporated by private Act, having obtained an indefeasible title to real propertyunder the Land Registry Act for purposes not authorized by the incorporating Act, may enter into an agreement for sale of the property and sue to recover arrears of payments due thereon: Hudson Bay Ins. Co. v. Credman (1918) 40 D. L. R. 274; (1919) 48 D. L. R. 234 (P.O.). To hold A bona fide agreement to sell is sufficient to prevent land. g forfeiture : London and Canadian Loan and Agency Co. V. Graham (1888) 16 0. R. 329. See also Becher v. Woods (1865) 16 U. C. C. P. 29; Sheppard v. Bonanza, f^c, Co. (1894) 25 0. R. 305. POWERS. Ill Reduce Capital or Repurchase Shares. Sect. 29. To an action for a call on stock by the liquidators of a company, the defendant pleaded that he had sub- capS or scribed for 80 shares of stock, on which he had paid 10 J^i;;^'.^^''' per cent. Subsequently at a meeting of the sharehold- ers duly called for that purpose it was decided in the interests of the company to reduce the capital from $1,000,000 to $250,000 by accepting a pa^nnent of 15 per cent, on the shares, and exchanging them with the shareholders for one quarter of the number of shares fully paid up. The defendant agreed to this arrange- ment and after paying up 15 per cent, of his shares, making 25 per cent, paid in all, he received from the managing director 20 paid up shares for the 80 shares held by him. This was done in good faith and in pur- suance of the resolution of the shareholders authoriz- ing it. It appeared that if the arrangement had been fully carried out it would have realized a sum sufficient to pay all the liabilities of the company. Held, however, that the company, without being specially authorized, could not reduce its capital, nor purchase, or accept a surrender of its shares, and the transaction was therefore ultra vires and void: Ross v. Fiset (1882) 8 Q. L. R. 251 S. C. Where a person has regularly become a shareholder the company has no power to acquire its o\vn shares by transfer or surrender from the shareholder apart from the remedi<'s it is authorized to enforce for non-pay- ment of calls: Br Wiunipcff Tlrdfje mid Wire Fence Com]>(nni (1912) 1 D. L. R. 316; Smith v. Gowganda (1909-10) 44 S. C. R. 621; Colonial Assurance Co. v. Smith (1913) 12 D. L. R. 113. Sec Stavcrt v. McMillan (1911) 24 ( ). L. H. 456, affirmed on appeal (1913) 13 D. L. R. 761 (P.C). Nor will a company be bound by a contract to re- sell or ])ur(^liase its own shares issued to a subscriber: . Hrhrifi V. Siemon (1910) 10 O. \V. \. 296; Ward v. Siemon (1918) 43 O. L. R. 113; in /,'r Colonial Assnr- ance Co.; Crossley's Case (1917) :U 1). L. R. 341, a transfer bv a shareholder in compromise of an ad inn 112 DOMliMON COMPANIES ACT. Sect. 29. of partly paid shares to a trustee for the company was held not to be a trafficking by the company in its shares. The following method of providing a company with working capital was held not to be a purchase by the company of its own shares. Under an agreement of the members of a syndicate which organized the com- pany a number of shares issued as fully paid up in consideration of the transfer of assets to the company were transferred to the president and secretary of the company for the purpose of providing funds for the organizing of the company and providing it with work- ing capital. A portion only of the shares were sold and the company having* become prosperous and there being no immediate prospect of further capital being required an action was brought by members of the syndicate to make the directors of the company account to them for the unsold balance. It was held that this was not a wrongful acquisition by the com- pany of its own shares ; that the syndicate had retained no individual interest in the shares; that the words "for the purpose of providing funds" simply showed the way in which the funds were to be used, but did not put any limitation upon the beneficial interest which was transferred; and that the directors were not bound to account for the unsold shares : Black v. Car- son (1913) 7D. L. R. 484; (1917) 36 D. L. E. 772 (P.C). In carrying out an arrangement of the above de- scription it will usually be found to be convenient to cause the shares to be transferred to the transfer agent of the company as trustee. It is also important to make adequate provision for the voting of the shares and the disposition of dividends thereon while the shares remain undisposed of and the final distribution of any surplus of shares not required to be sold among the shareholders for the time being of the company or as may be deemed advisable. For reduction of share capital under the Act see the notes to s. 54. To Give Warehouse Receipts. To give Appellant in this action claimed 1,100 tons of iron ^ieipS^^^ as endorsee of five warehouse receipts given by the POWERS. 113 Moisic Iron Co. Two of the receipts were signed by Sect. 29. the president and three by the secretary of the com- pany. Defendants pleaded that they were not ware- housemen and could not give warehouse receipts, and that their president and secretary had no authority to grant such receipts. Held, that the action must be dismissed as there was no evidence that the company were warehousemen, or that the president and secretary were authorized to sign warehouse receipts: Hearle v. Rhind (1878) 22 L. C. J. 239; 1 L.N. 101 Q. B. Miscellaneous Cases. Dividends cannot be declared when the capital would be impaired by so doing. This is ultra vires no matter how small the dividend: Colonial Insurance Company v. Smith (1913) 12 D. L. R. 113. That the performance of a contract requires the construction of an increased plant does not make it ultra vires: National Malleable, dc, Company v. Smith's Falls (1907) 14 0. L. R. 22. The power to buy the assets of another company is not taken away by a prohibition against leasing, amal- gamating or selling out to any other company: Cor- poration of the City of Toronto v. Toronto Electric Light (1905) 10 0. L. R. 621. It is ultra vires to forbid the transfer of paid up shares: Re Good d Jacob Y. Shantz Son dc Co., 21 O. L. R. 153; Re Imperial Starch Company (1905) 10 0. L. R. 22; Re Belleville Driving and Athletic Associa- tion (1911) 31 (). L. R. 79 (C. A.); Canada National Fire, dc, Co. v. Hutchings (1918) 87 L. J. P. C. 106. A covenant to establish and maintain a railway station is within the corporate powers of a develop- ment company **to do any act to increase the value of the property, etc.": Norquay v. G. T. P. Town and De- velopment Co. (1910) 25 D. L. R. 59. 30. The company shall, at all times, have an office in the offices, city or town in which its chief place of husiness in Canada is agpncics, situate, which shall be the legal flomicilc of the company in ' *'°"^' '• n.c.A. — 8 ll-i DOMINION COMPANIES ACT. Sect. 30. Canada ; and the company may establish such other offices and agencios elsewhere as it deems expedient. Notice. 2. Notice of the situation of such principal office and of any change therein shall be published in the Canada Gazette. 2 E. VIT.;c. 15,8.22. It should be noted that while the section contem- plates that the head office and the place where the company's main business in Canada is transacted should be one and the same, this is not necessarily the case. The naming of the office and the publication thereof by the company are decisive and it is not necessary that any part of the company's business in the ordinary sense of the term should be carried on at the place where the head office is situated. It is to the courts in the province where the com- pany's head office is situated that a petition to wind up the company must be presented: R. S. C. (1906) c. 144, s. 8. It does not, however, follow that a company may not have more than one place of residence. As a matter of fact it may be licensed to do business in one or more provinces under the extra-provincial corpora- tions acts there in force. In such case the naming of a registered office where service may be made and the appointing of an attorney on whom process may be served are required. It is in each case a question of fact whether the company carries on its business in any given place: Hag gin v. Comptoir D'Escampte, 23 Q. B. D. 521; Buckley* 8th ed., p. 176. For the purpose of taxation a company may be deemed to be resident in a jurisdiction other than that of the place where its head office is situated : De Beers Consolidated Mines, Limited v. Hoive (1906) A. C. 455, where it was held that for the purpose of the Income Tax Act, 1853, the company was resident in England. Section 95 of the Act provides that service of pro- cess shall be made "at the office of the company in the city or, town in which its chief place of business in Canada is situated." See also Section 91, which pro- vides that the books mentioned in Sections 89 and 90 OFFICES, AGENCIES, DOMICILE. 115 shall be kept ' ' at the head office or chief place of busi- Sect. 30. ness of the company" without adding the qualifying words **in Canada." Apart from the Act it would appear that the domi- cile of a company is determined by the situation of the office from which the company is controlled and man- aged, HaLsbury, vol. 5, para. 6. The question arises whether a company may be domiciled outside of the country under the laws of which it is incorporated. See as to this Halsbury, vol. 5, p. 15, note m. Doubts have arisen as to the validity of resolutions passed at meetings hold outside the incorporating State, see De Beers v. Howe (1905) A. C. 455. For a fuller discussion of this question see the notes to s. 77 dealing with meetings, and see Re Lands & Homes, d-c, Robertson's Case (1919) 44 D. L. R. 325 (Man. C.A.). 31. Every deed which any person, lawfully empowered in Acts of that behalf by the company as its attorney, signs on behalf of jJly^jng^ the company and seals with his seal, shall be binding on the company and shall have the same effect as if it was under the seal of the company. 2 E. VII., c. 15, s. 23. In Scottish Canadian Canning Co. v. Dickie (1915) 22 D. L. R. 890, it was held that the managing director of a company incorporated under the Imperial Com- ])anies (ConsoHdation) Act, 1908, to whom authority had been given to execute all deeds and instrnmonts which he might think necessary in connection with the company's business, was entitled to lease the com- pany's salmon cannery. 32. Every contract, agreement, engagement or bargain made, Contracts of and every bill <>f exchange drnwii, accepted or endorsed, and li*^''"*^ '^'"'^" every promissory note and chcfpic made, drawn or endorsed on p,„np.,ijy 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, shiill be binding upon the company. 2. In no case shiill it be necessary to have the seal of the Cnses where scnl not necessary. company aflixed to any such contract, agreement, engagement, ^"^"^ "'**• bargain, bill of exchange, promissory note or cheque, or to prove 116 DOMINION COMPANIES ACT. Sect. 32. tliiit tlu' same was madi", drawn, accepted or endorsed, as the case may lu'. in pui'siiance of any by-law (»r special vote or order. No indi- 3. No person so acting as such agent, officer or servant of vnluallia- ||^p company sliall be thereby subjected individually to any '^ ' ^* liability Avhatever to any third person. 2 E. VII., c. 15, s. 24. History of s. 32. Provincial variations. Construction of s. 32. Note on the powers and liabilities of corporations. (A) Contracts: (1) Limitations. Pre-incorporstion contracts. Subscription for shares before incorporation. Ultra vires contracts. (2) As to the necessity for affixing the corporate seal to the contract. Part performance. Other Canadian cases. Executed contracts not under seal enforced. Executory contracts not under seal not en- forced. Ontario Act. Contracts in pursuance of charter. Sec. 32 (2) — Form of the contract. Formalities in appointing agents. Miscellaneous cases. (3) Of the authority of the agent or officer. Agency in general. Directors, general agents, etc. Authority of agent. Agents de facto. Course of dealing. Holding out and acquiescence. Ostensible authority. Agent apparently acting within authority. Principle excluded. Officers— Manager and managing director; president; vice-president; secretary. Personal liability of agent. Bills, notes and cheques. Ratification. HISTORY OF SECTION 32, 117 (B) Liability for torts. Sect. 32. The provisions contained in the above section ap- History of peared in substantially the same form in (1902) c. 15, ^-^2. s. 24 ;R. S. C. (1886) c. 119, s. 76; and (1877) c. 40, s. 66. In order to determine the applicability of cases Provincial decided under the companies legislation of the various ^^"^*'°°^- provinces it is necessary to note the variations in the local acts which are as follows : — (a) The Quebec, New Brunswick and Manitoba Acts follow the phraseology of the Dominion Act. The section appears in the Quebec Act as para. 5997 ; in the New Brunswick Act as s. 72; in the Manitoba Act as s. 66. In the Manitoba Act the words, ''or otherwise" are added after the words ' ' in general accordance with his powers as such under the by-laws." (b) In Ontario the corresponding section, viz., s. 81 of E. S. 0. (1897) c. 191, reproducing s. 78 of 60 Vict. c. 28, appears to have been dropped in 1907, and in the subsequent revisions. (c) In the Nova Scotia Act, s. 88, c. 128 R. S. N. S. (1900) and amendments, reproduces s. 37 of the Im- perial Act of 1867. (d) The Acts of Saskatchewan, Alberta and British Columbia contain two sections, one incorporating the provisions of the Imperial Act, as in the case of Nova Scotia, and the other section containing a provision similar to the Dominion s. 32, covering contracts by officers and agents, and expressed to be subject to the first named section, viz., the section corresponding to the Imperial Act, 1867, s. 37. The sections in question appear in the Acts of the above named provinces as follows: — Saskatchewan, ss. 107, 108; Alberta, ss. 95, 97; British Columbia, ss. 84, 86. The provisions of the Imperial Act are found in sub-sections (1) and (2) of section 76 of the Act of 1908, which is a re-enactment of section 37 of the Act of 1867. The latter section reads as follows: — 118 DOIMINION COMPANIES ACT. Sect. 32. "Contracts on behalf of any company under the principal Act may be made as follows (that, is to say) : English Act. (1) Any contract which if made between private persons, would be by law required to be in writ- ing, and if made according to English law to be under seal, may be made on behalf of the com- l)any in writing under the common seal of the comi)any, and such contract may be in the same manner varied or discharged: (2) Any contract which if made between private persons, would be by law required to be in writ- ing, and signed by the parties to be charged therewith, may be made on behalf of the com- pany in writing signed by any person acting under the express or implied authority of the company, and such contract may in the same manner be varied or discharged : (3) Any contract which is made between private persons would by law be valid although made by parol only, and not reduced into writing, may be made by parol on behalf of the company by any person acting under the express or implied authority of the company, and such contract may in the same way be varied or discharged. And all contracts made according to the provisions herein contained shall be effectual in law, and shall be binding upon the company and their successors and all parties thereto, their heirs, executors, or administra- tors, as the case may b^ " Under the above section c xl under the acts of the various provinces which have adopted a similar pro- vision the common law rule as laid down in South of Ireland Colliery v. Waddle (1869) L. R. 4 C. P. 617, is further extended. The provisions last quoted are certainly more ex- plicit and are probably wider than the provisions of section 32. Under section 32 contracts made by the agents, officers or servants of the company *'in general ac- cordance" with their powers are binding on the com- POWERS AND LIABILITIES OF CORPOEATIONS. 119 pany, and this provision will be construed broadly and Sect. 32. a reasonable latitude allowed in ascertaining the^ agent's authority. See Taylor v. Cohourg, etc., Co. (1874) 24 C. P. 200; Thompson v. Brantford, etc., Co. (1898) 25 A. R. 340; Clarke v. Union Fire Insurance Co. (1884) 10 P. R. 339; BaiAi v. Anderson (1897) 27 0. R. 369, 374; Imperial Bank v. Farmers Trading Co., 13 Man. L. R. 412. Note on the powers and liabilities of corporations. (A) Contracts. (1) Limitations. (2) The necessity for a corporate seal (3) The authority of the officer or agent acting for the company. A corporation is as fully capable of binding itself by contract as an individual: Bateman v. Ashton- under-Lyne Corporation (1858) 3 H. & N. 323, per Martin, B., at p. 335; Ooregum Gold Mining Company Y. Roper (1892) A. C. 125. Such capacity is, however, subject to certain necessary limitations. (1) Limitations. A contract made on behalf of a company before Pre-incor- incorporation is not binding on the company and can^n^acS. not be ratified by it after incorporation: Kelner v. Baxter (1866-7) L. R. 2 C. P. 174; Re Empress Engin- eering Co. (1881) 16 Ch. D. 125. And the subsequent adoption and confirmation by the company of such a contract does not impose any obligation on the com- pany or establish any contractual relation between it and the other party to the contract: North Sydney Investynent Co. v. Biggins (1899) A. C. 263. Nor will the company be bound in such cases although the parties afterwards carry out some of the terms of the contract and act on the supposition that it was binding on the company: Coit v. IJoivling (1898-1901) 4 Terr. L. R. 464 ; and see Bagot Pneumatic Tyre Co. v. Clip- per Pneumatic Tyre Co. (1902) 1 Cli. 146. In England a provision in the articles of associa- tion that the company shall adopt and be bound by 120 Sect. 32. Subscrip- tion for shares be- fore incor- poration. Ultra vires contracts. DOMINION COMPANIES ACT. such a contract, or shall enter into a particular con- tract still leaves the company free until after its incor- poration it binds itself by contract: Re Northumber- land Avenue Hotel Co. (1886) 33 Ch. D. 16; Browne V. La Trinidad Co. (1888) 37 Ch. D. 1 ; J?e Dale and Plant, Ltd. (1889) 61 L. T. 206. Conversely, a company can not by adoption or ratification claim the benefit of a contract made on its behalf before incorporation: Natal Land So. Co. v. Pauline Colliery Syndicate (1904) A. C. 120. There is nothing, however, to prevent the company, after incorporation, from entering into a new con- tract on the terms of the pre-incorporation contract: Howard v. Patent Ivory Mfg. Co. (1888) 38 Ch. D. 156; Re Dale and Plant Ltd. (1889-90) 61 L. T. 206, 207. If the company merely takes the benefit of a contract made before its incorporation it will not be bound: Re Rotheram Alum Co. (1884) 25 Ch. D. 103; In re English & Colonial Produce Co. (1906) 2 Ch. 435; In re National Motor Mail Coach Co. (1908) 2 Ch. 515. A person who subscribes for shares in a company before incorporation, unless he signs the memoran- dum of agreement which accompanies the petition, in the absence of other facts wherebv he becomes a shareholder, is not liable on his subscription. See the notes to s. 46 where the cases are collected. A contract ultra vires the company is wholly void and cannot be enforced or ratified. Lack of power may arise from various causes, of which the most fundamental is constitutional limita- tion. A company can only receive such powers as the State or Province creating it has power to bestow upon it and if the State or Province assumes to confer upon the company greater poAver than it is able to bestow, the act of the Province or State is itself ultra vires and the company does not possess the powers which its charter assumes to confer upon it. LIMITATIONS OX POWERS. 121 " Where the incorporating authority itself has only Sect. 32. a limited power of incorporation the general words of the charter or memorandum of association must be read subject to that limitation, for the company can possess no greater powers than its creator has power to bestow on it." Weyhurn Townsite Co. Ltd. v. Hons- herger (1918) 43 0. L. R. at p. 4cQ^;Bank of Australia V. Earl, 13 Peters at p. 589; Canadian Pacific Ry. v. Western Union, 17 S. C. R. at p. 163. The lack of power to contract may be limited by the statute under which the company is incorporated. See Henderson v. Strang (1918) 43 0. L. R. 617; 45 0. L. R. 215. The power to contract is limited to objects for which the company is incorporated and matters inci- dental to or consequential upon such objects: Ashbury V. Riche,Ij. R. 7 H. L. 653; Attorney General v. Great Eastern By. L. R. 5 App. Cas. 473 ; Williams v. Craw- ford, 16 0. L. R. 245; unless the corporation is a com- mon law corporation : Bonanza Creek Gold Mining Co. V. The King (1916) 1 A. C. 566; Edivards v. Blackmore (1918) 42 0. L. R. 105. A limitation may also be prescribed by the general by-laws or articles of the company. But a stranger dealing witli the company will not be affected by such limitation unless he had notice thereof. In some cases corporations are by their constitu- tions required to observe certain formalities wlien making contracts. In these cases the requirements of tlie constitution must be strictly carried out: McKay v. City of Toronto (1917) 39 O. L. R. 34; (1918) 43 0. L. R. 263; (1919) 88 L. J. P. C. 204; Cope V. Thames Haven S Dock Bail Co. (1849) 3 Exch. 841; Stevens v. Hounsloiv Burial Board (1889) 61 L. T. 839; Eaton V. Busker (1881) 7 Q. B. 1). 529. (2) As to the necessity for affixing the corporate seal to the contract. The original nil(» of tlie common law that the contract of a corporation aggregate must be under seal still obtains save in so far as exceptions have been grafted u[)oii it, ]m-v Ferguson, J., in Hill v. Ingersoll 122 DOMINION COMPANIES ACT. Sect. 32. Executed contracts not en- forced. Road Co. (1900) 32 0. R. p. 202; and see Bartlett v. Town of Amhersthurfj, 14 IT. C. R. 152; McLean v. Town of Brantford, 16 U. C. R. 347; Ilouck v. Toivn of Whithij, 14 Grant. 671; Silshy v. Village of Dunnvillc, 31 C. P. 301, 8 A. R. 524; 6 Vin. Abr. 267; 1 Wms. Saunders 615, 616; Oxford Corporation v. Croiv (1893) 3 Ch. 535. Where the governing statute prescribes the affixing of a seal such direction must be observed and no re- covery can be had against the corporation in the ab- sence of a seal even though the contract is executed: McKay v. Toronto (1917) 39 0. L. R. 34; in appeal (1918) 43 0. L. R. 263; (1919) 88 L. J. P. C. 204. Where a statute provided that all contracts of a company over a certain amount ' ' shall be under seal ' ' it was held that the plaintiff could not recover for work done in pursuance of a contract not under seal although the corporation had the benefit of the work: Frend V. Dennett (1858) 4 C. B. N. S. 576; Hunt v. Wimbledon Local Board (1879) 4 C. P. D. 48. But see Bernardin v. Municipality of North Dufferin (1891) 19 S. C. R. 581 and King v. Beamish (1916) 30 D. L. R. 116. School trustees held not liable to pay for a school- house erected for and accepted by them. Macaulay, C. J., Marshall v. School Trustees of Kitley (1855) 4 C. P. 373. Executed contract for opening road approved of by township surveyor: Fetterly v. Russell and Card- bridge (1857) 14 IT. C. R. 433. Executed contract between two railways special in its terms, held invalid: Great Western R. W. Co. v. Preston and Berlin R. W. Co., 17 U. C. R. 477. Action against a corporation for work performed at request of ratepayers' committee, dismissed: Stone- burgh V. Brighton (1859) 8 C. P. 155. It is a general principle that a corporation can not be bound by anything in the nature of an agreement relating to real property, except under seal, but there are cases where it may be bound by a resolution of CONTRACTS. 123 the governing body, e ven in the case of a sale or pur- Sect. 32. chase of land, as w'/iere the corporation has agreed by resolution to purchase and has entered into posses- sion: Jennett v. Sinclair (1876) 10 N. S. (1 R. & C.) 392. Not in every case of an executed consideration will a corporation be bound by a contract irregularly made by some of the directors and not by the board. The Court will look at all the circumstances, and fix the corporation with liability only where it would be flagrantly dishonest in the corporation to resist pay- ment: Hamilton S Port Dover Ry. Co. v. Gore Bank (1873) 20 Gr. 190. Where there is part performance the invalidity Part per- of an agreement for a lease for want of the corporate ^""""^-^"ce. seal of the lessee, a municipal corporation, or the absence of seals to the municipal resolution authoriz- ing it, can not be relied upon: Toivnship of King v. Beamish (1916) 30 D. L. R. 116. But this and the fol- lowing cases must now be considered as of doubtful validity in view of the decision in McKay v. Toronto, supra. Other Canadian cases. Executed contracts not under seal have been enforced in the following cases: The lessee of a corporation who has had posses- Executed sion not allowed to set up the want of seal: Municipal'^'^^^^^^^^ Council of Frontenac v. Chestnut (1852) 9 U. C. R. 365, and a corporation may also be sued for use and possession in sucli a case: Maynard v. Gamble (1863) 13 C. P. 56. Agreement for compensation by mining company to discoverer of a mine: McDonald v. Upper Canada Mining Co. (1868) 15 Gr. 179. Agreement enforced to pay solicitor's costs to be incurred bv bankers where costs were incurred: Tlam- iUon (C Port Dover R. Co. v. Gore Bank (187.3) 20 Gr. 190. 124 DOMINION COMPANIES ACT. Sect. 32. Work done under building contract altered by parol: Davis v. Grand Biver Navigation Co. (1840) 6 U. C. R. (0. S.) 59. Executed Action sustained against corporation for work on'f.VrmV^ doue for and accepted by them: Pim v. Municipal Council of Ontario (1860) 9 C. P. 304. Mechanics' institute liable to architect for prepar- ing plans and superintending the erection of a hall for their accommodation, Draper, J. dissenting: Clark V. Hamilton Mechanics' Institute (1854) 12 U. C. R. 178. Engineer employed by chairman of committee of council entitled to recover (1) for plans; (2) for jour- ney to Quebec at request of alderman : Perry v. Ottawa (1864) 23 U. C. R. 391. Contractor recovered for road built, though mode of payment agreed on was not authorized by Act of in- corporation: TJiornton v. Sandtvich Street etc. Co. (1866) 25 U. C. R. 591. Expense of bringing a dredge to a municipality at its request: Brown v. The Corporation of Belleville (1870)30U. C.R.373. Executed contracts for alterations and improve- ments to court house : Mcintosh v. Commissioners, etc., of Halifax (1888) 20 N. S. R. 430. Absence of seal must be specially pleaded by the defendant: Ihid. Purchase money received under parol agreement to supply manufactured goods: Diamond v. St. George Lime Co., 4 N. B. (2 Kerr.) 537. Municipal weigh-master recovered arrears of salary up to time of dismissal, but not subsequently : Demp- sey V. Toronto (1849) 6 N. C. Q. B. 1. A chief engineer of a railway company recovered for arrears of salary: Forest v. Great North-West R. W. Co. (1899) 12 M. R. 472. Policies of an insurance company signed by the president and countersigned by the secretary were held valid without the seal of the company being COISTTEACTS. 125 aflfixed: Dimock v. N. B. Marine Insurance Co. (1849) Sect. 32. 6 N. B. (1 Al.) 398. The setting up of '' the Want of a seal " as a de- fence to an action on an insurance policy which had been treated by all parties as a valid policy was said to be a fraud which a Court of Equity could not refuse to interfere to prevent, without ignoring its functions and its duty to prevent and redress all fraud whenever and in whatever shape it appears : London Life Assur- ance Co. V. WrigM (1880) 5 S. C. E. 466. In the absence of an express statutory requirement of a contract under seal, wherever the purposes for which a corporation is created render it necessary that work should be done or goods supplied to carry such purposes into effect, and orders are given at a corporate meeting regularly constituted and having general authority to make contracts for work or goods necessary for the purposes for which the corporation was created, and the work is done or goods supplied and accepted by the corporation and the whole con- sideration for payment executed, there is a contract to pay implied from the acts of the corporation, and the corporation cannot keep the goods or the benefit and refuse to pay on the mere ground that the form- ality of a deed or of affixing the seal was wanting: Campbell v. CommiiniUj dc. (1910) 20 0. L. R. 467; Gowans Kent v. Assinaboia Club (1915) 25 D. L. R. 695 ; Lawford v. Billericay Rural Council (1903) 1 K. B. 772, C. A. (plans of sewage extension scheme) ; following Clarke v. Cuck field Union Guardians (1852) 21 L. J. (Q. B.) 349 (supply of water closets to workhouse) ; Nicholson V. Bradfield Union Guardians (1866) L. R. 1 Q. B. 620 (supply of coals to workhouse) and Eaiqh V. North Bricrley Union Guardians (1858) E. B. & E. 873 (employment of special auditor to audit accounts of clerks suspected of fraud) ; Sanders v. St. Neot's Union (1846) 8 Q. B. 810 (supply of iron gates to work- house) ; De Graves v. Monmouth Corporation (1830) 4 C. & P. ni (supply of weights and measures); and Doe d. Penviufiton v. Taniere (1848) 12 Q. B. 998 126 DOMINION COMPANIES ACT. Sect. 32. (lease from year to year implied from receipt of rent), and disai)])rovinf>- Ludlow Corporation v. Charlton (1840) 6 M. & W. 815 (contract to pay for improve- ments) ; S))iart v. TT'^^s^- Ham Union Guardians (1855) 10 Exch. 867; Dyte v. St. Pancras Guardians (1872) 27 L. T. 342 (appointment of medical officer). In the case of a non-trading corporation the cor- poration will be liable if the contract is executed: Campbell v. Community (1910) 20 0. L. R. 467; Goivans Kent v. Assinahoia Cluh (1915) 25 D. L. R. 695. In the case of a non-trading company whose con- stitution contains no provision dispensing with the necessity for a seal the general rule is that the com- pany will be held not liable if the contract is executory. There is a broad and well marked distinction be- tween contracts executed and contracts executory in the case of incorporated companies whether trading or not, and where a contract is executory a company is not bound unless the contract is made in pursu- ance of its charter or is under its corporate seal. The defendant company, who had occupied certain prem- ises under a verbal agreement and paid rent for a year continued in possession after the year and then went out, paying rent for the time they were actually in possession. Held, that as there was no lease under seal the company were not liable as tenants from year to year, but only for use and occupation while actually in possession : Finlay v. The Bristol and Exeter R. W. Co. (1852) 7 Ex. 409, discussed and followed; Garland Co. V. Northumberkmd Co. (1900) 31 0. R. 40; doubted in Young v. Bank of Nova Scotia (1915) 34 0. L. R. 176, 182. But to bind a corporation by an executory contract to purchase for an indefinite and protracted period, would require an agreement under seal : Hill V. Ingersoll Sc. Co. (1900) 32 0. R. 194. Where a lease under seal exists the consequences of overholding and paying rent are the same for a corporation tenant as for an individual: Young v. Bank of Nova Scotia (1915) 34 0. L. R. 176, but a ver- CONTRACTS. 127 (Dal lease for a year entered into by the manager of Sect. 32. a non-trading corporation not under corporate seal or by-law will not be impliedly renewed by holding over. In such case the company is only liable for use and occupation: Richardson v. Urban Mutual Sc, Co. (1916) 28 D. L. R. .12, 26 Man. L. R. 372, following Finlay v. Bristol 7 Ex. 409. In Winnipeg Hedge and Wire Fence Co. (1912) 1 D. L. R. 316, a treasurer's statement enumerated among the assets of the company " patent, $20,000." The statement was adopted by the board. The incor- porators acting as a syndicate had been negotiating to transfer the patent to the company. There was no by-law or other document under the company's seal and it was held that the statement of the treasurer and its adoption were insufficient evidence of a con- tract by the company to take over the patent at $20,000. Executory Contracts not under seal, were not enforced in the following instances: — Executory agreement to build an engine for a Executory steamboat: Hawilton v. The Niagara Harbour and not en- ^ Dock Co. (1842) 6 U. C. R. (0. S.) 381. f^^^^'^- Contractor entitled to recover the value of work done but not damages sustained from not being allowed to finisli the job: Bartless v. Amherstburg (1856) 14 U. C. R. 152; but see McLean v. Brantford (1858) 16 U. C. R. 347. Executory contract for sale of land not enforced • against a corporation: Hou-.'l: v Town of Whitby nSGS) 14 Gr. 671. See also Qninn v. School Trustees (1850) 7 U. C. R. 130, where it was held that an action on the case, fouiuU'fl on a parol agreement with a teacher, against the scli(»ol trustees for wrongful dismissal, would not lie where the contract was not under seal. Contract for suy)ply of gas not binding: Smith v. Lovdov Gas Co. (1859) 7 Gr. 112. Trading company held not liable f.-r refusing to accept bari'c.ls ordered by written contract not under 1-8 DOMINION COMPANIES ACT. Sect. 32. seal: Wlinfate v. EnniskVden U'd JiefinuKj Co. (1864-) -.14 0. P. 3:9. Executory agreement by a corporation to purchase fire hose not enforced: Brown v. Lindsay (1874) 35 U. C. Q. B. 509. Civil engineer failed to recover against a railway company: Armstrong v. Portage, etc., R. Co. (1884) 1 M. R. 344. But see Murdoch v. Manitoba, etc., R. Co. (1881) Temp. Wood (Man.) 334. In the case of companies incorporated under this Act the words of sub-section 2 appear to obviate the necessity for a seal except in cases where it would be necessary for an individual to use a seal. And even in the case of certain trading corpora- tions to which the section does, not apply the defence of absence of the corporate seal can rarely prevail. The doctrine of the common law was that corpora- tions could bind themselves only under their common seal, except in small matters of daily occurrence, as in the appointment of servants and the like. The principle of these exceptions was in the words of the Court of Exchequer Chamber, '* convenience, amount- ing almost to necessity." The great increase in the importance and variety of corporate undertakings which has taken place in modern times has led to a corresponding increase of the exceptions. And this principle of '' convenience amounting almost to necessity " has been extended to cover all contracts • which can be fairly regarded as incidental to the objects and powers of the company. Pollock on Con- tracts, 6th ed., pp. 142, 145, approved in Thompson V. Brantford Electric Co. (1898), 25 A. R. p. 348. Ontario The principles which obtain in our jurisprudence ^^^- are fully stated in McKnight v. Van Sickler (1915) 51 S. C. R. 374, and particularly by Mr. Justice Duff at p. 383, where the principle long established in South of Ireland Co. v. Waddell L. R. 3 C. P. at p. 643, was fully adopted as being the law in Canada. Contracts in Contracts not under the corporate seal made charten^^ ^ with trading corporations relating to purposes for COKTRACTS. 129 which they are incorporated or apparently formed, Sect. 32. and of such a nature as would induce the Court to decree specific performance thereof if made between ordinary individuals ^vil\ be enforced against tliem. Ontario Western Lumber Co. v. Citizens' Telephone, etc., Co. (1896) 32 C. L. J. 237. As to what is a trading corporation, see Richard- son V. Urban Mutual &c. Co. (1916) 28 D. L. R. 12; 26 Man. R. 372. '' The defendants are a trading corporation estab- lished for carrying on the business for which they are incorporated, and after much conHict it is now very clearly established that a contract of this kind does not require to be under seal." ' ' A company can only carry on business by agents, managers and others, and if the contracts made by these persons are contracts which relate to objects and purposes of the company and are not inconsistent with the rules and regulations which govern their acts, they are valid and binding upon the company though not under seal." " If it is directly connected with the object of the corporation in carrying on the trade, the magnitude or insignificance of the contract is not an element in deciding cases of this kind. It is clear, therefore, that this was a contract not required to be under seal:" Thompson v. Brantford Electric, etc., Co., 25 Ont. A. R. 340. See also Holmes v. French (1898) 1 Ir. 319 at p. 333; Foster v. British Colonial Fire Ins. Co. (1917) 37 D. L. R. 404. It is enough if the contract is in furtherance of the company's objects, e.fj., a contract of sale of land with a view to enable the company to purchase other lands for the carrying out of its busi- ness: Van SicJder v. McKnir/ht Construction Co. (1914) 31 (). L. R. 531 at p. 537, (1915) 51 S. C. R. 374. And it has been held that it is incidental to the l)urpose and ()l)jects of a trading company to restore to ;i working condition .in exjierienced employee injured while in the service of the company and to D.r.A. — 130 DOMINION COMPANIES ACT. Sect. 32. incur cxponso for that purpose: Lediudl v. Charlotte- town Light cO Power Co. Ltd. (1913) 13 E. L. R. 225. See also A. E. Thomas Ltd. v. Standard Bank (1909-10) 1 0. W. N. 379; Trusts & Guarantee v. Ahhott Mitchell (1906) 11 0. L. R. 4.03; Brandon Con- struction Co. V. Saskatoon School Board (1912) 5 D. L. R. 754; (1913) 13 D. L. R. 379; Houghton Land Cor- poration V. Ingham (1914) 24 Man. R. 497, is possibly to be explained as a decision depending on the pro- visions of the Manitoba Companies Act, R. S. M. 1913 c. 35. fonTi"cte^ The following executory contracts, though not under enforced. Seal, Were enforced: — Contract for stone work by Co-operative Stone- cutters' Association enforced at the suit of the Asso- ciation, it being considered a trading corporation : Ontario Co-operative Stonecutters' Association v. Clark (1880) 31 C. P. 280. The contract for future sale of cheese by a cheese companv enforced: Albert Cheese Co. v. Learning (1880) 31 C. P. 272. Contract of hiring for "the season" enforced by master of a vessel against a railway company : Ellis v. Midland R. Co. (1882) 7 A. R. 464."' Assumpsit held maintainable on parol agreement for supplving water: Blue v. Gas and Water Co. (1849) 6 U. C. Q. B. 174. Enquiry directed as to damages suffered by con- tractor employed by managing director where pre- vented by company from completing contract : White- head V. Buffalo, etc., R. W. Co. (1859) 7 Gr. 351; but varied on appeal so far as damages allowed for not being allowed to complete the contract, see 8 Gr. 157. s. 32(2)— AVhere a contract is executed under the connnon the'^?on?ract. ^<^'^1 ^^^^ following form sliould be followed : the com- pany is expressed to be one of the parties and the final clause should read: " In witness whereof the company has caused its corporate seal to be hereto affixed, at- tested by the hands of its proper officers." CONTRACTS. 131 The mere affixing of the corporate seal is sufficient Sect. 32. without the signature of the officers ; but if the by-laws provide as they usually do that the seal should be affixed by certain officers who shall add their signa- tures, it would seem that the company would not be bound where the signatures did not appear, as the other party could not maintain that the affixing of the seal was apparently regular. The company will not be bound where the seal has been fraudulently affixed by the secretary: Ruben v. Great Fingall Consolidated Go. (1906) A. C. 439. See also Davies v. Bolton (1894) 3 Ch. 678. Formerly the rule was that the affixing of the cor- porate seal implied delivery. It would seem, however, that actual delivery is now requisite : Glarke v. 7m- 2}erial Gas, dc, Co. (1833) 4 B. & Ad. 315; and the modern law appears to be in harmony with the fact that a company may execute a deed in escrow. A slight variation in the name of the company in a written contract, e.g., ''M. Beatty & Sons Co., Lim.," where the jjroper name was ''M. Beatty & Sons, Limited" will not invalidate the contract: Schmidt v. M. Beatty S Sons, Limited (1916) 10 0. W. N. 230. Formalities in appointment of agents. In Birney v. Toronto Milk Company (1903) 5 0. L. R. 1, it was held that it was requisite for the valid ap- pointment of a manager that his appointment should be under seal. A time keeper is not such a superior officer that his appointment nmst be under seal: Gordon v. Toronto, do., Land Co. (1885) 2 M. R. 318; see also Belch v. Manitoba (1887) 4 M. R. 199; Hughes v. Canada Permanent (1876) 39 U. C. Q. B. 221. Wliere the company is being sued for remunera- tion by the agent the question wlietlier he was validly appoint('(l is important; see the above cases. If the agent has performed all the services under the contract whereby he was appointed, the absence of an appoint- ment under seal is not fatal : Forest v. G. N. W. Ry. Co. (1 899) 1 2 Afan. R. 472. See also McEdwards v. Ogilvie (1887) 4 Man. L.R.I. ous cases. lo2 DOMINION COMPAiNlKS ACT. Sect. 32. Oil llio other hand the duty of engaging minor clerks and servants is conmionly delegated to one or other of the officers of tlie company. No formalities are requisite for the appointment of an agent for the perfornuuice of ordinary services; he need not be ap- pointed by deed: llalsbury, vol. 1, pp. 155 and 156. Miscellaneous cases. Misceiiane- Where an instrument is produced under seal of the company, the seal must prima facie be taken to be properly affixed, but the presumption is rebuttable : D'Arcij V. Tamar Ry. Co. (1867) L. II. 2 Ex. 158. The equitable rule of part performance taking the case out of the Statute of Frauds, applies to a com- pany: Iloivard v. Patent Ivory Co. (1888) 38 Ch. D. 163.' Where a contract has been entered in the minutes of a company, and the minutes have been signed by the president or chairman, this will be considered a suffi- cient writing to satisfy section 4 of the Statute of Frauds: Jones v. Victoria Graving Dock Co. (1877) 2 Q. B. D. 314. A company is bound by a contract for the purchase of goods where such purchase is intra vires even though the seller may have notice that the goods have been purchased for a purpose which is ultra vires of the company: Re Contract Corporation (1869) L. R. 8 Eq. 14. ' Where a person did work for a company, and agreed to accept either shares or cash in payment, it was held, that on a winding-up he could not be com- pelled by the liquidators to accept shares against his wish: Re Alexander Park Co. (1866) W. N. 231. And one who enters upon and pays rent for cor- poration property under a demise for a number of years, made on behalf of a corporation, but not sealed with their common seal, becomes tenant from year to year under the corporation, on such terms of the de- mise as are applicable to yearly tenancies, and the cor- poration may also distrain for rent : Wood v. Tait AUTHOEITY OF AGEXT OR OFFICER. 133 (1806) 5 B. & P. 247; Ecclesiastical Commissioners v. Sect. 32. Merrill (1869) L. R. 4 Ex. 162. As to implied contract of hiring, see O'Dell v. Bos- ton and Nova Scotia Coal Co. (1897) 29 N. S. R. 385. As to liability for costs of solicitor, see Duff v. Canada Mutual Fire Ins. Co. (1882) 9 P. R. 292; 2 0. R. 560. As to contracts with foreign corporations, see Cana- dian Pacific R. W. Co. v. Western Union Telegraph Co. (1889) 17 S. C. R. 151. As to goods supplied to an inchoate company, see Seifferf v. Irving, 15 0. R. 173; and services, O'Dell v. Boston and Nova Scotia Coal Co. (1897) 29 N. S. R. 385. As to bills of exchange and promissory notes, see Bryant v. Banque du Peuple, Bryant v. Quebec Bank [1893] A. C. 170; Fair child v. Ferguson (1892) 21 S. C. R. 484; and Bridgewater Cheese Factory Co. v. Murphy (1894) 26 0. R. 327; 23 A. R. 66. As to the right to prove a claim for taxes against an incorporated company in liquidation, and also uncol- lected water rates, see Re Ottawa Porcelain Co. (1900) 31 0. R. 679. (3) Of the authority of the agent or ofRcer who assumes to make the contract for the company. Every company has an imi)lied power to act through Agency iu its agents, since l)eing an artificial person it **can not *''^"'^^'' ■ act in its own person, for it has no person" : Ferguson V.Wilson (1866) 2 Ch. 77, 89. Sub-section 1 of Section 32 relates only to the power conferred by the by-laws on the agent, officer or ser- vant, but cases frequently arise where, though the agent, officer oi- servant is validly a])p()iiito(l, yet the powers of sucli an agent, officer or servant are not ex- pressed in any l)y-law, and tlie aid of this section can- not in conseciuence be invoked — but the authority of an officer or agent may be implied from various circum- stances and tlie com]iany will be bound by his acts not- witlistaiidiiig lliat no autliority was in fact conferred or that it has been exceeded. 134 DOMINION COMPANIES ACT. Sect. 32. The authority of any agent, officer or servant is always a question of fact and consequently the reported decisions are numerous and not always reconcilable. Dinvtors, The general agents of the company are the direc- agents. toYS, to wliom tlic management of the company's affairs is entrusted; and the board acting as such will as a general rule have power to bind the company by any arrangement or contract. See the notes to s. 80 for a discussion of the powers of directors. A single direc- tor not specially authorized has no power to bind the company: Bent v. Arroivhead (1909) 18 Man. L. R. 633;Swayse v. Grobh (1915) 8 0. W. N. 316 (a case of an agreement with a single director for the allotment of stock). But not the While the directors are invested with the manage- agents. mcut of the Company, they may and commonly do dele- gate the performance of many acts to officers, clerks and servants of the company, who to the extent of the agency expressly or impliedly delegated are the agents of the company and are entitled to bind it by their acts. See s. 80 (d). The matter is well put in Thompson v. Brantford Electric, <&c., Co. (1898) 25 A. R. 340, at p. 345. ''The directors of a company are not, however, necessarily its only agents. It is generally necessary for them to employ other persons to act for the company, and where this is the case those persons will also have power to bind the company within the limits of their agency, and as a rule their authority cannot be denied, unless their emplojTiient was beyond the power of the directors, or they had been employed irregularly, and the person dealing with them had notice of the irre- gularity. ' ' Practical Where the authority of the officer or agent is doubt- ti(ms^^" ful? or in transactions of any magnitude, it is always advisable to insist on the production of a properly certified copy of a resolution of the board of directors authorizing the specific contract or transaction pro- posed to be entered into on the company's behalf. Authority of The authority of the agent or officer may be con- ^^^^ ' ferred by the by-laws, and, if in purporting to bind the AUTHORITY OF AGENT OR OFFICER. 135 company, he is acting squarely within his authority Sect. 32. thereunder, the section applies and the company will be bound, subject to the following qualification. If there is anything in the governing act or in the charter limiting the authority of the company or of its agent or officer, a person dealing with him being affected mth notice thereof does so at his peril: Thompson v. Brant- ford Electric, dc, Co. (1898) 25 A. R. 340, 346. Where relying on this section it is sought to make a company liable on a contract entered into by an officer or agent, proof should be given as to the by-laws or other means of enabling him to create a binding en- gagement: Williams v. Craivford Tug Co. (1908) 16 0. L. R. 245, per Boyd, C, at p. 248. In one case the court found as a fact that a contract was entered into by an officer in general accordance vAth his powers under the by-laws where nothing appeared in evidence to lead to the contrarv conclusion: Bain v. Anderson (1897) 27 0. R. 369, 374. The following cases indicate the leading principles to be applied : Bifjgerstaff v. RowatVs Wharf (1896) 2 Ch. 93. In that case question arose as to the validity of cer- tain assignments of book debts by a managing director. The defendant company gave a series of orders on the debtors of the company, Harvey, Brand Co. These assignments or hypothecations of book debts were signed on behalf of the company by one Davy as man- aging director. Lord Justice Kay in his judgment, says at p. 106: "Whether Mr. Davy had been formally appointed managing director does not signify; he acted and was recognized as such. By the articles the directors were authorized to delegate to him all their powers except the drawing, indorsing and accepting bills of exchange and promissory notes." At page 103 Lord Justice Lopes says : "The question as to the hypothecation of debts is quite distinct. It is said that the managing director 186 DOMINION COMPANIES ACT. Sect. 32. liad no power to liypotliecate tlieiii. There is no doubt Mr. Davy was the managing' director and acted as such, and according to the articles the directors could have given him the power which he purported to exercise. There is an absence of evidence that they had done so ) but is that enough to ijiake his acts void? In Lindley ■Ml Companies, 5th ed., p. 159, the law is thus laid down: 'Upon principle, therefore, where persons are in fact employed by directors to transact business for a company the authority of those persons to bind a comi)any within the scope of their employment cannot be denied by the company, unless — (1) their employ- ment was altogether beyond the powers of the direc- tors; or unless, (2), the persons employed have been appointed irregularly, and those who dealt with them had notice of the irregularity. Where the power to appoint an agent for a given purpose exists, irregular- ity in its exercise is immaterial to a person dealing with the agent bona fide and without notice of the irre- gularity in his appointment. The following cases are important on this point. In Smith v. Hull Glass Com- pany, 8 C. B. 668 ; 11 C. B. 897, it was hold that a com- pany registered under 7 & 8 Vict. c. 110, was liable to pay for goods ordered by persons in its employ, and that it "was not necessary for the plaintiff to prove that those persons were authorized by the directors to order the goods in question. Maule, J., w^ent further than this, and his judgment is an authority for the broad proposition that a company is bound by the acts of persons who take upon themselves, with the knowledge of the directors, to act for the company, provided such persons act within the limits of their api)arent autho- rity; and that strangers dealing bona fide with such persons have a right to assume that they have been duly appointed. This view is in accordance with later authorities.' " Every word of that applies here. National Malleable Castings Co. v. Smith's Falls Malleable Castings Co., 14 O. L. R., at p. 28. The plaintiffs sued on an agreement to furnish the plaintiffs malleable iron coupler parts as ordered from AUTHORITY OF AGENT OR OFFICER. 137 time to time. The order was accepted by the managing Sect. 32. director without any specified authority from the direc- tors of the company, and there was no formal subse- quent approval or disapproval by the board of what bad been done. It was contended that the agreement did not bind the company. At p. 28 Garrow, J.A., says : ''Apart from the other objections, the contract is in its nature one which prima facie the board of direc- tors might la^^'fully enter into. It is, although exten- sive and important, after all, only one to manufacture and supply articles of the kind for the manufacture and sale of which the defendants were expressly organ- ized, namely, malleable iron castings. And that being so, the board of directors would certainly, I think, have had power to bind tlie company by entering into such an agreement. And if the board could lawfully have done so, they could also, I think, have authorized the manager to do so for the company. And in the total absence of bad faith or notice, the plaintiffs were entitled to assume that he had been duly clothed with the real authority wliich he was ostensibly exercising in entering into the contract in question. See R. S. 0., ]897, eh. 191, sees. 46, 47, 81; Thompson v. Brant ford Electric and Operatinq Co., 25 A. R. 340; 7?o?/ai British Bank v. Turquand (1855-6) 5 E. & B. 248, 6 E. & B. 327." In McKnight Construction Co. v. Vansicldar (1915) 51 S. C. R., at p. 382, Mr. Justice Duff says : "The first point is as to the authority of the secre- tai-y-treasuror. This point, although apparently taken in the Court of Appeal, was not taken in tlie appel- lant's factum and was, I think, advanced during the oral argument liere on tlie invitation of llic VxMich. T am not surprised at this because on examining tlie re- cord, there appears to be ample evidence that the secre- tary-treasurer was the apparent agent of the company for the trnnsaction of the kind of business he under- took to do. That being so, the case is within tho priii- 138 DOMINION COMPANIES ACT. Sect. 32. eiplo very satisfactorily stated in Palmer's Company ^Law, 9tli ed., 1911, p. 44, in the following words: " 'This rule is that where a company is regulated by an Act of Parliament, general or special, or by a deed of settlement or memorandum and articles regis- tered in some public office, persons dealing with the company are bound to read the Act and registered documents, and to see that the proposed dealing is not inconsistent therewith; but they are not bound to do more ; they need not inquire into the regularity of the internal proceedings — what Lord Hatherley called 'the indoor management.' They are entitled to assume that all is being done regularly. See also Mahony v. East Holy ford Mining Co., L. R. 7 H. L. 869; Bar gate V. Sliortridge, 5 H. L. Cas. 297, at p. 318; In re Land Credit Co. of Ireland, 4 Cli. App. 460; In re County Life Assurance Co., 5 Ch. Apj). 288 ; Premier Industrial Bank v. Carlton Manufacturing Co. (1909) 1 K. B. 106, is not easily reconcilable with the rule. " 'This rule is based on the principle of conveni- ence, for business could not be carried on if a person dealing with the apparent agents of a company was compelled to call for evidence that all internal regula- tions had been duly observed.' " And at p. 387 Mr. Justice Anglin says : "For any lack of formality in the steps leading to the authorization of Douglas, the plaintiffs should not suffer. They were not called upon to ascertain that proper steps had been taken to clothe him with autho- rity to execute the contract with them on behalf of the company. They acted with perfect good faith. The power which Douglas purported to exercise was such as, under the constitution of the company, he might possess, and that is enough for a person dealing with him bona fide-. Biggerstaff v. Rotvatt's Wharf (1896) 2 Ch. 93, at p. 102; Premier Industrial Bank v. Carlton Manufacturing Co. (1909) 1 K. B. 106, at pp. 113-14. On the evidence I incline to think that the proper inference is that Douglas was in fact clothed with authority to bind the company by an agreement such AUTHORITY OF AGEXT OR OFFICER. 139 as he made ; but, if not, it is clear that under the statu- Sect. 32. tory powers of the directors and the by-laws of the company provision was made for vesting such autho- rity in an ofificer holding his position, and as against third parties dealing mth such an officer in good faith in regard to a matter in respect of which the authority could be so conferred upon him, the company cannot be heard to deny his power to bind it. TotterdeUv. Fare- ham Blue Brick and Tile Co., L. R. 1 C. P. 674." In Canadian General Securities Co. v. George (1918) 42 0. L. R. 560, the action was for recovery of the purchase price of vacant lots. The defendant set up an agreement by a sales agent of the plaintiff com- pany to resell the lots for him within a limited time at a certain advance. At p. 569 Riddell, J., delivering the judgment of the Appellate Division, says : ''It is, however, objected that there was no autho- rity in George to make such a contract; but that is answered by Clancy's ratification. Clancy being made general manager to sell the plaintiff's land, the secret restriction of his authority (if there was such) would not affect the defendant who relied upon Clancy being the general manager: McKnight Construction Co. v. Vansickler, 51 S. C. R. 374, 24 D. L. R. 298; VansicJder v. Knight Coyistruction Co. (1914) 31 0. L. R. 531, 19 D. L. R. 505; Clarke v. Latham, 25 D. L. R. 751, and cases cited. It is impossible, I think, to hold that the general manager of a company has not the power to make such a contract for his company as is here dis- closed. " It is not necessary for a porsori contracting with a Agents Je company to satisfy liimsclf that the officer or agent ^"^*^*'- purporting to act for it has ])een duly appointed. The appointment may have been irregular, or the company by acquiescence in tlie unauthorized acts of the agent may liavc lield him out as having authority to bind it to the obligation in question. In such cases acts by the agent witliin the scope of his apparent authority will bind the company, provided the othci- party to tlie con- tract had no notice of the defective appointment or the 140 DOMINION rOMPAXTKS ACT. Sect. 32, liniilations ol' the agent's authority: Mahoney v. East lloUiford Minincj Co. (1875) L. K. 7 H. L. 869. In this case the articles of association provided that cheques were to be signed and countersigned as might be directed by the board. Cheques were honored by the bankers of the company purporting to be signed by two of the directors and countersigned by the secre- tary, though, as a matter of fact, no directors had ever been elected, nor was any resolution ever passed in re- ference to the signing of cheques. It was held by the House of Lords that the bank need not inquire whether the persons pretending to sign as directors had been duly appointed to office. Lord Hatherley said at p. 894: ''When there are persons conducting the affairs of the company in a manner which appears to be perfectly consonant with the articles of association, then those so dealing with them, externally, are not to be affected by any irregu- larities which may take place in the internal manage- ment of the company. Tliey are entitled to presume tliat that of w^hich only they can have knowledge, namely, the external acts are rightly done, when those external acts purport to be performed in the mode in which they ought to be performed. For instance when a cheque is signed by three directors, they are entitled to assume that those direc- tors are persons properly appointed for the purpose of performing that function, and have properly per- formed the function for which they have been ap- pointed. Of course the case is open to any observation arising from gross negligence or fraud." See also Re County Life Assurance Co. (1870) L. R. 5 Ch. 293; Thompson v. Brantford Electric, (&c., Co. (1898) 25 A. R. 340, 345; McKnight Construction Co. v. Vansickler (1915) 51 S. C. R. 374. Course of Where the company has by its course of dealing dealing. j^^^]^ ^^^ ^^ officer or agent as having authority it will be bound by his acts within such apparent authority. Thus in Imperial Bank v. Farmers' Trading Co. (1901) 13 Man. L. R. 412, although there was no AUTHORITY OF AGENT OR OFFICER. 141 by-law, resolution or other act defining the powers Sect. 32. of the managing director, but the company had " frequently given promissory notes which had been paid by the company's cheques, it was held that the note sued upon had been made in general accordance with the powers of the managing director and was binding on the company. If the company has permitted its agent to act in a Holding out certain capacity without objection and his acts of jl^en^^fj;"'" agency have been acquiesced in by the company, the latter may be liable on the principle of holding out: Central Canada Raihvay Co. v. Murray (1882) 8 S. C. R. 314; Hamilton, dc, Ry. Co. v. Gorehank (1873) 20 Gr. 190; Wilson v. West Hartlepool, dc, Co. (1864) 34 Beav. 187; Sheppard v. Bonanza Nickel Co. (1894) 25 0. R. 305. See Middoivan v. German Canadian Land Co. (1909) 19 Man. L. R. 667, at p. 672; Brandon Con- struction Co. V. Saskatchewan School Board (1912). 5 D. L. R. 754, reversed on other grounds (1913) 13 D. L. R. 379; Acton Tanning Co. v. Toronto Suburban By. (1918) 56 S. C. R. 196. The company may also be liable on the principle Ostensible of estoppel for acts done by an agent within his ""tiontv. apparent authority. If a contract is executed by an officer to whom the necessary authority might have been given it is not incumbent on the other contracting party to ascertain whether he has been regularly clothed with the requisite autliority: McKniyht Con- struction Co. V. Vansickler (1915) 51 S. C. R. 374; 24 D. L. R. 298, whore the authorities are collected. See also National Malleable, Sc, Co. v. Smith's Falls (1907) 14 1). L. R. 22; Foley v. Barber (1909) 1 0. W. N. 40; Doctor v. Peoples Trust Co. (1914) 16 D. L. R. 192; Vancouver Enyineering Works v. Columbia, dc, Co. (1914) 16 D. L. R. Sn-^ Acton Tanning Co. v. To- ronto Suburban By. Co. (1918) 56 S. C. R. 106. And a secret restriction of the agent's authority will not affect the i)erson dealing with him: Canadian General Securities v. George (1918) 42 O. T.. R. 560, 570. A 142 DOMINION COMPANIES ACT. Sect. 32. company iiiay fuvtliennore estop itselt' i'roni denying the authority of an officer, e.g., if it lias obtained ad- vances on the strength of a note endorsed by him : G. B. C. V. Bellanuj (1916) 25 D. L. R. 133. Asont ap- The conipaiiy will also be bound on the principle of m'tin'g ^ estoppel wlierc the agent is apparently exercising an ^rit ^° ^^^' '"^^^tli^^i'itv which he in fact possesses : Ward v. Montreal ""^ ^' Storage', Sc, Freezing Co. (1904) 26 Que. S. C. 310. In such cases the apparent authority is held to be the real authority: Bryant Poivis v. Quebec Bank (1893) A. C. 170; MacKenzie v. Monarch Life (1911) 45 S. C. R. 232, but see same case in Privy Council (1913) 15 D. L. R. 695. When the charter of a corporation does not provide for the exercise of its powers otherwise than in giving the right to make by-laws for the government of the institution and of the officers and servants belonging thereto and no such by-laws are made, the persons who are admitted to have cle facto and by common consent acted as a governing committee of the body, will be held to be its duly authorized agents whose acts within the limits of the charter are binding upon it : Hopital du Sacre Coeur v. Lefehvre, 17 Q. L. R. 35. See also Gowans Kent v. Assiniboia Club (1916) 25 D. L. R. 695. Principle ex- The abovc principle is excluded by notice of the lack of authority of the agent : Dickson Co. of Peterborough V. Graham (1913) 9 D. L. R. 813 ; Union Bank v. Eureka Woollen Mfg. Co., 33 N. S. R. 302; likewise where there is no authorization and the agreement is not in the ordinary course of the company's business: Sinclair v. Toronto Brick Co. (1916) 10 6. W. N. 250; Bird V. Eussey Ferrier (1913) 5 0. W. N. 60. If the company, however, has neither appointed an agent at all, nor held out anyone as agent, it can not be made liable: Bent v. Arrowhead (1909) 18 Man. L. R. 632. As to the authority of particular officers the follow- ing cases may be referred to : OFFICERS. 143 Officers. Sect. 32. It is usual for a company to appoint a manager or Manager managing director with more or less wide powers over '^^fn^^dkec- the management of the company's affairs. It is not tor. ultra vires of a company to give the general manager power over ''all the administration of the business of the company subject only to such direction and control as it is the duty of the directors to exercise" : Montreal Public Service Corporation v. Champagne (1917) 33 D. L. R. 49. The manager may or may not also be a director. In his capacity as a director he w^ould have no power individually to bind the company since the directors ' authority is vested in them as a body. The extent of the manager's authority is governed prim- arily by the by-laws, but the company may become liable for his acts on one or more of the principles above discussed ; and the company will not necessarily escape liability even though there are no by-laws con- ferring authority on its officers or agents: National Malleable, dc, Co. v. Smith's Falls (1907) 14 0. L. R. 22. See the following cases on the authority of the manager: Thompson v. Brantford Electric, &c.. Go. (1898) 25 A. R. 340; Ontario Western Lumber Co. v. Citizens' Telephone Co. (1896) 32 C. L. J. 237 -, Bain v. Anderson (1896) 27 0. R. 369, 374; Foleij v. Barber (1909) 1 O. W. N. 40; Doctor v. People's Trust Co. (1914) 16 D. L. R. 192; Foster v. B. C. Colonial Fire Insurance Co. (1917) 37 D. L. R. 404; Canadian Gen- eral Securities, Ltd. v. George (1918) 42 0. L. R. 560; Dickson Co. of Peterborough v. Graham (1913) 9 D. L. R. 813; Sinclair v. Toronto Brick Co. (1916) 10 0. W. N. 250; Joshua Callotvay v. Stobart (1905) 35 S. C. R. 30] ; Brandon Construction Co. v. Saskatchetvan School Board (1912) 5 D. L. R. 754; (1913) 13 J). L. R. 379; In re Farmers Loan and Savings Co. (1901) 21 Occ. N. 383; Picard v. Revelstoke Sawmill Co. (1913) 9 T). L. R. 580, 12 D. L. R. 685; Lcdwcll v. Charlofte- tonn Light and Powrr Co. (1915) 13 E. L. R. 225; -144 DOMINION COMPANIES ACT. Sect. 32. McGec v. Rosetoivn Electric (1917-8) 1 1 !Sask. ii. 68, 71 ; Hedican v. Croiv's Nest Pass, dec, Co. (1914) 17 D. L. II. 1(34. I'nsident. The presideiit of a company has no more power by virtue of his office than an ordinary director of the company, but under the by-laws extensive powers are usually conferred. See Almon v. Laiv (1894) 26 N. S. 340; North West Transportation Co. v. Beatty (1887) 12 Ajip. Cas. 589; Bridgeivater Cheese Factory Co. v. Murphy (1896) 26 S. C. R. 443; Neelon v. Town of Thorold (1893) 22 S. C. R. 390; Young y. Consumers'. Cordage Co. (1896) 9 Que. S. C. 471; Schmidt v. M. Beatty S Sons, Ltd. (1916) 10 0. W. N. 230. Parties dealing with the president of a company are bound to take notice that they are dealing with a person having a limited authority, and they are bound by the limitation of authority contained in the charter of the company: Balfour v. Ernest (1859) 5 C. B. N. S. 624. And the comj)any is equally bound, although the president may not have been elected regularly, if there is a "holding out" to the public that he is president, or if he is ''president de facto^' : Almon v. Law, supra. Where the directors of a company have power to borrow money and mortgage, the president and man- aging director are by virtue of their office prima facie the proper officers to execute mortgages ; and a mort- gage so signed and sealed with the company's seal is properly executed: Canadian Bank of Commerce v. Smith (1911) 17 W. L. R. 135. See also Tanguay v. Boyal Paper Mills (1907) Que. 31 S. C. 397; Beaucage v. Winnipeg Stone Co. (1910) 14 W. L. R. 575. The president without the express delegation of authority by resolution of the board may institute and prosecute actions for the company and appoint an at- torney ad litem: Standard Trust Co. v. South Shore By. (i902-3) 5 Que. P. R. 257. Where the president has ostensible authority to bind the company and there is no notice of any limita- tion thereof, a verbal contract made by such officer and OFFICERS. 145 acquiesced in by the company for a number of years Sect. 32. will not be set aside : Acton Tanning Co. v. Tronto Sub- urbmi Ry. Co. (1918) 56 S. C. R. 196. See also Thomas, Ltd. v. Standard Bank (1909-10) 1 0. W. N. 548. It is customary in the case of large companies to vice-presi- have one or more vice-presidents, sometimes with ^^^°*- purely nominal or formal duties and powers, although frequently the vice-president is authorized to act in the absence of the president and to exercise some of the functions of the latter. The vice-president when acting within his powers can bind the company: Whaley v. O'Grady (1912) 22 Man. L. R. 379. See also Ward V. Montreal Storage and Freezing Co. (1904) Que. 26 S. C. 310. The secretary acting as agent of the company within Secretary. the scope of his employment may bind the company by his acts, and the company will be liable whether he is acting for its benefit or not: Lloyd v. Grace Smith & Co. (1912) W. N. 213. See also Hambro v. Burnand (1904) 2 K. B. 10; Bryant Poivis v. Quebec Bank (1893) A. C. 170. Forgery by the secretary seems to depend on a different rule ; see Ruben v. Great Fingall (1906) A. C. 439, where a company was hold not bound by a share certificate to which the seal of the company had been affixed, the secretary having forged the signature of the directors. So also a company may repudiate a cheque on which the signatures of the directors have been forged by the secretary: Kepfi- qalla Rubber Estates v. National Bank of India (1909) 2K. R. 1010. Tlie secretary lias no power without authorization to call a meeting: Re Ilaycroft, dc, Co. (1900) 2 Ch. 230; nor to sign a guarantee in the name of the com- pany: Williams v. Crawford Tug Co. (1908) 16 0. L. R. 245 ; nor to pass transfers of shares not fully paid x^y.Chida Mines, Ltd. (1905-6) 22 T. L. R. 27. Ill Van Sickler v. McKnight Construction Co. (1914) :;i (). L. R. 5.''.1 ; (1915) 51 S. P. R. .^74. Ilio signa- ge, a.— io 1-16 DOMINION COMPANIES ACT. Sect. 32. tiire of the secretary-treasurer to a contract in which the president concurred, but being absent did not sign, was held binding on the company, it appearing further that the secretary-treasurer was authorized to enter into a contract of the kind in question by the general course of business adopted by the company. See also Hamilton and Port Dover Ry. v. Gorebank, 20 Gr. 190; Barnett v. South London Tramivays (1887) 18 Q. B. D. 815. Personal liability of agent. Personal lia- Independently of s. 32 (3) an agent acting for a agent. ^^ principal incurs no personal liability. The act is the act of the principal who is entitled to any benefit and must meet any liability resufting from such act. Wliere something is done by an agent or servant ''in general accordance with his powers as such under the by-laws of the company," s. 32 itself affords a protection. The agent will be personally liable if : (a) his authority is defective or non-existent, or (b) if, through failing to make it clear that he contracted as agent, he is held to have contracted as principal or the personal liability of the agent was con- templated by the parties. Where an agent contracts without authorization he is liable to a third person not aware of the defect of authority as on an implied war- ranty of authority: Collen v. Wright (1857) 8 E. & B. 647; Coit v. Doivling (1898-1901) 4 Terr. L. R. 464. So if a person enters into a contract on behalf of a non-existing company, he will be personally liable on an implied warranty of authority: Coit v. Doivling (1898-1901) 4 Terr. L. R. 464. In Vulcan Iron Works v. Leary (1905) 1 W. L. R. 453, a manager was held personally liable under the following circumstances: — One G. L., ordered goods signing his own name to a letter headed ''Bayne Valley Brick Works, Geo. Leary, Manager." The company was not in existence and the manager was debited with the goods sold and credited with the payments made, although cheques in pa^nnent were all signed ''Geo. Leary, Manager Bayne Valley Brick Works." BELLS, NOTES AND CHEQUES. 147 An officer or agent may become personally liable on Sect. 32. a contract if he has entered into it on his own behalf, even though the agreement is signed in the name of the company only. In Wood v. Grand Valley (1912) 27 0. L. E. 556, (1915) 51 S. C. R. 283, the president of the company signed an agreement '*on his own behalf" signing the name of the company over his own name followed by the word '^Prest." ,It was held that the obligation stated to have been assumed by the officer could not be void because he did not sign a second time in his individual capacity. If on the other hand the liability of the company was contemplated it will be the company and not the officer who will be liable even though the signature may be somewhat ambiguous : Johnston v. Hamilton, 13 U. C. R. 211, where the defendant who was president of the Victoria Bridge Company signed the agreement in question describing himself as "Pres. V. B. )> The most frequent instances of personal liability buis. notes arising from failure to make it clear tliat the agent |!i^p|n,es was contracting as such, and any personal respon- sibility was intended to be excluded, are found in the case of promissory notes signed by an officer or agent of a company. Where parties '' describe themselves as directors or by any similar form of description, but do not state on the face of the document that it is on account or on behalf of those whom they might otherwise be considered as representing, if they have merely described themselves as directors, but do not state that they are acting on behalf of the company,— they are iiidividuallv lial)]e:" Dutton v. Marsli (1871) L. R. G Q. B. 361 per Cockburn, C. J., at p. 364. If on the other hand iliey state tliat they are acting on behalf of the company they are not liable. The word " we " instead of " I," used in a jti-oiu- issory note sigtned by an officci- in liis individual capacity, does not necessarily imply that tlie note was tliat of the company: T And say -Walker v. Wilson (1916) 27 D. 1.. R. 233. Extrinsic evidence is not 1-iS DOMINION COMPANIES ACT. Sect. 32. ndinissible to show that a promissory note signed by a managing director in his individual capacity was intended to be that of the corporation, ibid. See also Wilton V. Manitoba dc. Oil Co. (1915) 25 D. L. R. 243; Crane v. Lavoie (1912) 4 D. L. R. 175; Fairchild v. Ferguson (1893) 21 S. C. R. 484. In an action on a promissory note signed by a company and several individuals the question at issue was whether the note was that of the company only, or whether the individual signers of it w^ere also liable. The note was in form, "we promise to pay" and signed " The Alberta Brick Company, Ltd. — W. C. Harris, Dir. Wm. M. Cross Mgr., F. C. Everard. ' ' It was held that there was nothing upon the face of the note to indicate that the individual signers of it were not personally liable : Union Bank of Canada v. Cross (1912) 5 A. L. R. 489. In Bank of Montreal v. DeLatre (1848) 5 U. C. Q. B. 362, the president of the company accepted a bill thus, "P. C. DeLatre, President N. H. & D. Co." In an action by the payee against the acceptor personally lie was held to be liable and the addition of his descrip- tion did not aid him. See also Armour v. Gates (1859) 8 U. C. C. P. 548; Lai7ig v. Taijlor (1876) 26 U. C. C. P. 416; City Bank v. Cheney (1857) 15 U. C. Q. B. 400 ; and Maclaren, Bills Notes and Cheques, ed. 4, p. 158; Falconbridge, Banking, ed. 2, p. 565. These sections do not confer power to execute bills and notes or to borrow by means of them, but simply point out how the power is to be exercised when it has been conferred on the company: Re Peruvian Railways Co. (1867) L. R. 2 Ch. 617, where it was said that s. 47 of the Imperial Act of 1862, which is some- what similar to the above section, does not confer a jjower of issuing negotiable instruments, but that such a power exists only where upon a fair construction of the memorandum and articles of association, it appears that it was as intended to be conferred. Ratifica- Unauthorized acts of agents may be ratified by '"'°" tlie company, either expressly or impliedly. Thus LIABILITY FOR TORTS. 149 where tlie agent of the mercantile company purchased Sect. 32. property for the company and gave the company's note in payment and the company received notice that it had been given and took steps to repudiate it and subsequently entered into possession of the land, it was held that they had ratified the act of their agent and were bound by the note: Ri/au v. Terminal City Co. (1893) 25 N. S. 131. See further the notes to s. 80. (B) Liability for Torts. A company is liable for the acts of its agents and ^g^ncy in for the natural consequences of those acts when done "^" by them in the ordinary course of the company's busi- ness. Hence, as a result of its agent's wrong, a cor- poration may be held liable for negligence: Mersey Dock Trustees v. Gihb (1865) L. R. 1 H. L. 93; Parnaby v. Lancaster Canal (1839) 11 A. & E. 223; for trespass, Maund v. Monmouthshire Canal (1842) 4 M. & G. 452; for malicious prosecution, Abrath v. N. E. Ry. Co. (1886) 11 App. Cas. 247; Edivards v. Midland Rail Co. (1880) 6 Q. B. D. 287; for libel, Whitfield v. ^'. E. Ry. Co. (1858) E. B. & E. 122; Carroll v. Pen- herthy Injector Co. (1889) 16 A. R. 446; Tench v. G. W. R. Co. (1872) 32 U. C. R. 452; Freeborn v Singer Seivinq Machine Co. (1885) 2 Isl. R. 253; Llnstitut Canadien v. Le Nouveau Monde (1873) 17 L. C. J. 296; for assault and battery, Butler v. Manchester Ry. Co. (1888) 21 Q. B. D. 207; for nuisance, Rapier v. Loudon Tramn-ays Co. (1893) 69 L. T. 361 ; for fraud, Ranvick V. Enfjlish Joint Stock Bank (1867) L. R. 2 Ex. 259; ?Tonldsworth v. City of Glasyoiv Bank (1880) 5 App. ('as. 317; Mackay v. Commercial Bank of New Bruns- wick (1874) L. R. 5 P. C. 394; Moore v. Ontario Invest- ment Association (1888) 16 O. R. 269. It may be indicted or fined for breach of duty imposed 1)y llie Law: R. V. Birnmniham Ry. Co. (1842) 3 Q. B. 223; /.'. V. Tyler S Co., [1891 ] 2 Q. B. 588. It may be estopped by the acts of its agents: Burkinshaw v. Nichols (i878) 3 App. Cas. 1004; Bloomenthal v. Ford [1897] A. C. 156. And finally it may be held guilty of laches dO DOMINION COMPANIES ACT. Sect. 32. and bound by acqiiioscence : Erlanqer v. New Sombrero (1878) 3 App. Oas. 1218-, NicoVs Case (1885) 29 Cli. I). 421. ^ For altlioiioli it may not have eyes and see wliat is going on it has agents who can see : Crook v. Cor- poration of Seaford (1871 ) L. R. 6' Ch. 551. A company on the ordinary principles of the law of agency is answerable for the manner in which its agent has conducted himself in transacting the business which he was authorized to do, and if a sales agent sells stock and represents that his principal has power to repurchase it and will repurchase it, which the prin- cipal, an incorporated company, has no power to do, the principal will be bound to refund the money paid: Whaley v. O'Grady (1912) 4 D. L. R. 485. Notice. The doctrine of notice extends to companies, and notice to an agent will be notice to a company whether the knowledge of the agent was acquired in the course of his employment or in any other manner: Dresser v. Norivood (1864) 17 C. B. N. S. 466; Ryan v. Terminal City Co. (1893) 25 N. S. 131. Name with 33. The company shall keep its name, with the word limited Td*'^ re uked ^^^^^ ^^® name, painted or aJBfixed, in letters easily legible, in a to be used conspicuous position on the outside of every office or place in [^^certain which the business of the company is carried on, and shall have its name, with the said word after it, engraven in legible charac- ters, on its seal, and shall have its name, with the said word after it in legible characters, mentioned in all notices, advertise- ments and other official publications of the company 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. 2 E. VII., c. 15, s. 25. The penalty which is imposed by section 114 of the Act for failure to keep the name of the company followed by the word '' limited " affixed as required by Section 33 is $20 per - day during such default, payable by the company and also by every director and manager knowingly or wilfully permitting or authorizing such default. Section 115 provides that directors, managers or officers of the company or any other person acting on ways. USE OF WORD 'limited.' 151 its behalf responsible for the infraction of the remain- Sect. 33. ing provisions of the section shall incur a penalty of $200. Such persons also incur a personal liability to the holder of a bill of exchange, promissory note, cheque, or order for money or goods, where section 33 has not been complied with, unless the company duly meets its liability thereunder. So if the Avord ' ' limited ' ' is omitted from a bill of exchange the officer signing it will be personally liable : Penrose v. Martyr (1858) E. B. E. 499. In AtJcin & Co. v. ^YardU (1889) 61 L. T. 23, Denman, J., said at page 26 with reference to the similar sections 41 and 42 of the Imperial Companies Act, 1862, '' The intention of the Act was to ensure extreme strictness in all the transactions of limited companies as regards use of the registered name of the company not only in enforcing the use of the word ' limited ' but in all other respects. Cases may easily be conceived in which a very slight variation from the registered name might lead a person to believe that he was taking a bill of a totally different kind of company from that to which the directors signing the bill really belonged. ' ' If there is an addition to the proper title of the companv that is not a compliance mtli the section: Nassau Steam Press v. Tyler (1894) 70 L. T. 376. But where a bill of exchange was drawn on a company in its proper name but the acceptance thereof omitted the word "limited" it was held that tlie name of the company was " mentioned " in accordance with the statute and that the directors who signed the bill were not personally liable. It was not necessary that the name should appear correctly both in the bill and in the acceptance: Dermantine Co. v. Ashtvorth (1905) 21 T. L. R. 510. This case was followed in F. Stacey £ Co. Limited v. WalUs (1912) 105 L. T. 544, in which it was further held that the abbreviation " Ltd " was, tiiougli '* L " or *'Li " possibly miglit not be, a compliance with the requirements of Section 63 of the Imperial Companies (Consolidation) Act, 1908. It cannot be confidently stated that tlio last 152 DOMINION' COMPANIES ACT, Sect. 33. montionod case, as ropfards the use of the abbreviation, ~ would be applicable here, omng to the fact that the Dominion Act, unlike the Imperial Act, expressly states that the word ** limited " shall appear after the name of the company. At all events in Hoivell Lithographic Company v. Brefhouer (1899) 30 0. R. 204, the use of the abbreviation '' Ltd." was held to be not a compliance with 52 Vict. c. 26 s. 2 (Ontario) which provides " that directors shall be jointly and severally liable upon every written contract or under- taking of the company, on the face whereof the word 'limited' or the words 'limited liability' are not dis- tinctly written or printed. . . ." On the other hand so far as the liability of the company itself is concerned on documents to ' which the Company is a party such liability is not avoided by the use of the abbreviation " Ltd." although the statute requires the word to be written in full: A. E. Thomas, Limited v. Standard Bank of Canada (1909- 10) 1 0. W, N. 379, 548. The Statute there considered was the Ontario Companies Act (1907) c. 34. s. 27 similar in its terms to section 33 of the Dominion Act. The same is true where the word "Company" is abbreviated to "Co." Thompson v. Big Cities Realty & Agency Co. (1910) 21 0. L. R. 394. It should be noted that. the section requires the name to be affixed on the outside of the office or place of business, and the object of the section and the literal meaning of the words used may perhaps require some- thing more than the placing of the name of company on the outside of a suite of offices in an office building, although this is the usual course in actual practice. Obtaining of Further Powers. Company 34. The company may, from time to time, by a resolution may author- passed by the votes of shareholders representing at least two- toVp^pTy to™ thirds in value of the subscribed stock of the company, at a 'jxtend or special general meeting called for the purpose, authorize the reduce pow- (jij-ectors to apply for supplementary letters patent, extending the powers of the company to such further or other purposes or objects for which a company may be incorporated under this Part, or reducing, limiting, amending or varying such powers, OBTAINING FURTHER POWERS. ^ 153 or any provisions of the letters patent or supplementary letters Sect. 34. patent issued to the company, as are defined in such resolution." 4-5 Geo. V. 191-i, c. 23, s. 4. 35. The directors may, at any time within six months after .\ippiicatiou the passing of any such resolution, make application to the i>y directors. Secretary of State, for the issue of such supplementary letters patent. 2 E. VII., c. 15, s. 27. 36. Before such supplementary letters patent are issued, E\idence of the applicants shall establish to the satisfaction of the Secretary i-osolution. of State the due passing of the resolution authorizing the application, and for that purpose the Secretary of State shall take any requisite evidence in writing, by oath or affirmation, or by statutory declaration under the Canada Evidence Act, and shall keep of recoi'd any such evidence so taken. 2 E. VIT., c. 15, s. 28. The following are the Departmental instructions : The application for Supplementary Letters Patent extending, reducing, limiting or amending the powers of a company or any provisions of the Letters Patent or Supplementary Letters Patent should consist of the following documents, viz. — 1. Petition by Directors for Supplementary Letters Patent. The petition should be signed by the Directors or a majority of them, in person and in pre- sence of a witness who should make the re- quired statutory declaration of execution, and the seal of the company should be attached thereto. 2. Affidavit or Declaration verifying Signatures of the Petitioners. 3. Affidavit or Declaration verifying truth of facts set out in Petition. 4. Evidence that the by-law of the Directors was duly approved of at a meeting of shareliolders, and tliat such meeting was called in accord- ance with the by-laws of the c()mi)aiiy. 5. Copy of by-law or resolution passed by tlie share- liolders. 6. Affidavit or declaration verifying same. 154 DOMINION COMPANIES ACT. Sect. 37. 37. Upon tlio due passing of sucli resolution being so es- vSiippieiuen- '^^^^i^^^^^' ^^^^ Secretary of State may grant supplementary rary letters letters patent extending the powers of the company to all or patent ;; ran ted. Notice of issue. EBfoct of letters. any of the objects defined in the resolution; and notice thereof shall be forthwith given by the Secretary of State in the Canada Gazette, in the form D in the schedule to this Act 2. P'rom the date of the supplementary letters patent, the undertaking of the company shall extend to and include the further or other purposes or objects set out in the supplementary letters patent as fully as if such further or other purposes or objects were mentioned in the original letters patent. 2 E. VII., c. 15, s. 29. Subsection 3 requiring a copy of the notice to be advertised by the company was repealed by 7-8 George V. (1917) c. 25, s. 16. Section 113 of the Act imposing a penalty for failure to advertise the notice was like- wise repealed by s. 14 of the same amending act. Limited to amount un- paid on stock. Liability of Shareholders. 38. The shareholders of the company shall not, as such, be responsible for any act, default or liability of the company, or for any engagement, claim, payment, loss, injury, transaction, matter or thing relating to or connected with the company, beyond the amount unpaid on their respective shares in the capital stock thereof. 2 E. VII., c. 15, s. 30. Rule of lim- At common law every member of an unincorpor- ited ha iiity. ^^^^ partnership, whether it was an ordinary firm or a joint stock company with transferable shares, was personally liable for all debts contracted while he was a member. Numerous attempts were made to evade this rule but owing to modern facilities for incorpora- tion, they have ceased to be of practical interest. The fundamental rule of limited liability is that from the moment of incorporation the members cease to be in any way liable for the debts of the body corporate, unless there is express statutory provision that the shareholders shall be liable: Emerson v. Flint (1858) . 7 C. P. 161 ; and see Salomon v. Salomon {1897) A.C. 22. Rests on All Companies under the act, except those incor- shi'res^ °^ porated for purposes other than gain under s. 7 A, are limited by shares. Membership in the company is LIABILITY OF SHAREHOLDERS. 155 conferred by and the liability of the members rests on Sect. 38. the holding of shares in the capital stock. The sole obligation of the shareholder as such is to pay the amount owing in respect of the shares held by him and this obligation is primarily one due to and enforceable by the company. The obligation of the shareholder is to pay up the Extent of full par value of his shares; there is no provision in obligation. the act for the issue of shares at a discount as may be done under the Ontario Companies Act, Part XI., though a similar result can be accomplished by the issue of shares without par value under s. 7B. The company may, however, pay a commission on the sale of its shares and a power to do so should appear in the letters patent, and to this extent the rule that the company must receive dollar for dollar for its shares is cut down. See Metropolitan Coal Consumers Asso- ciation v. Scrimgeour (1895) 2 Q. B. 604; Andreae v. Zinc Mines S Ltd. (1918) 87 L. J. Ch. 1019. Shares may be paid for either in cash or in some ^j^^^^ ^j p^jy. other way. Thus where an officer of the company had ment. credited himself with disbursements properly made it was held that his shares were paid up in this manner : Re Ottawa Cement Block Co., McCoun's Case (1907) 14 0. L. R. 389. Where applicants for shares had signed the stock book for two shares each for the purpose of incorpor- ating the company, and it was agreed between tliem and a partnership, vendors to the company of certain assets for paid up shares, that on the completion of the transaction with the company there would be issued to them, as part of the sale consideration of three hun- dred shares, two fully paid shares representing the two shares subscribed for by each, it was held that the liabilitv on the shares was satisfied: Re C. />'. C. Corest 6'o.^(1908) 12 O. W. R. 185. Teolzel, J., nt j). 186 of the report said, *' None of the transactions are impeached as fraudulent, and it seems to me that it was competent for the cf)mpany, with the assent of all IjG l)t)MlNU)X COMI'AXIKS ACT. Sect. 38. parties concerned to exchani>-e pro tanfo the obli^i>'a- tion of the company to issne shares under the agree- ment of purchase for the o])ligations of the apiieUants to i)ay for tlie. . . .shares subscribed for by them." Payment by It is not illegal for a company to take a promissory liot""'^'^''' ^^ote in pajTiient of shares : Standard Bank v. Stephens (1908) 16 0. L. R. 115 and cases cited at p. 121; nor to issue paid-up certificates on receipt of the aote under the circumstances in Anglo-American Lumber Co. V. McLellan (1908) 13 B. C. R. 318, (1908) 14 B. C. R. 93. But see O'Sidlivan v. Donovan (1906) 8 0. W. R. 320. As to when a note constitutes payment see Stewart Hoive v. Meek (1913) 9 D. L. R. 484, 485. Payment by PajTuent may be made in money's worth if the service/ ^^ Company has authorized such payment. The former act, R. S. C, 1886, c. 119, s. 27, required a written contract to be filed with the Secretary of State at or before the issue of the shares, where these were issued for a consideration other than cash. See Morris v. Union Bank (1901) 31 S. C. R. 594; Re Jasper Liquor Co. (1915) 23 D. L. R. 894. This provision has now been dropped, but such contracts must be disclosed in- the prospectus where s. 43 A of the act applies. Where a company chooses to take property, ser- vices or other consideration not possessing an obvious money value in payment of shares, the value placed by the parties on such consideration will be accepted by the Court, and so long as the contract is not impugned in an action to set it aside the court will not examine into the adequacy of the consideration; Re Hess (1894) 23 S. C. R. 644; PelVs Case (1870) L. R. 5 Ch. 11; Re Wragg, Ltd. (1897) 1 Ch. 796; Re Theatrical Trust (1895) 1 Ch. 771; Re Innes S Co. (1903) 2 Ch. 254, Re North Baij Supply Co. (1905) 6 0. .W. R. 85; Jones v. Wliller (1893) 24 0. R. 268; National Trust v. Frank (1917) 3 W. W. R. 43. See also Re Modern House Sc, Co., Goudg's Case (1913) 28 0. L. R. 237; (1913) 29 0. L. R. 266. LIABILITY OF SHAREHOLDERS. 157 The agreement must be between the subscriber and Sect. 38. the company, and if it is made betwen the subscriber and the person who solicited him to become a share- holder it will not bind the compan}^: Christin v. Union Navigation Co., Ramsay's Digest 391 (Q. B. 1882). The same is true of an agreement made with a pro- visional director of a railway company on condition that the subscriber shall receive the contract for build- ing the road: Wilson v. Gintg (1878-9) 3 A. R. 124, and see Jones v. Montreal Cotton Co. (Q. B. 1878) 24 L. C. J. 108, 1 L. N. 450. Tn the following cases the shareholder was held to iiiustra- have paid up his shares : — Re Wragg, Ltd. (1897) 1 Ch. ^^'-"®- 796, set-off of existing debt; Re Theatrical Trust (1895) 1 Ch. 771, agreement to render services; Gardiner v. Iredale (1912) 1 Ch. 770, agreement by company for immediate payment for future services; Inglis V. Wellington {ISIS) 29 U. C. C. P. 387, agree- ment for payment by performance of services; Re Hess (1894) 23 S. C. R. 644, transfer of property. In the following instances shares were held not to have been paid up-.—Pellatt's Case (1867) 2 Ch. 527, agreement to accept sujjply of goods in future; Re Eddystone Marine Insurance Co. (1893) 3 Ch. 9, agree- ment to issue shares in payment of past services : Oore- giun V. Roper (1892) A. C. 125, consideration illusory; Almada and Tirito Co. (1888) 38 Ch. D. 415, shares issued at a discount; Re Wragg Ltd. (1897) 1 Ch. at p. 831, issue of paid up shares in satisfaction of a debt , of less amount than their par value; Colluu/ivood Dri) Dork, WcddeWs Case (1890) 20 0. R. 107, services in connection with formation of the company; Union Rank V. Morris & Code (1900) 27 A. R. 396, subscriber icceived back portion of amount pafil in consideration for services rendered; Colonial Insurance Co. v. Smith {V.n:\) 23 Man. L. R. 243, consideration unsubstantial Mild illusory; Re Cornivall Furniture Co. (1910) 20 (). L. K. 520, bonus stock; He Oiroi Souiid Luiiihcr Co. (1917) 33 1). L. R. 487, 38 O. L. R. 414, shares allotted to ))romoters for profits in fact belonging to the com- 158 DOMINION COMPANIES ACT. Sect. 38. paiiy; Mosclcy v. Koffyfontem (1904) 2 Ch. 108; ~~ Winnipeg Hedge ut tlic subsecjuent section liJB would indi- cate that the provisions as to disclosure relate only to a prospectus issued by or on behalf of the comjiany Hself or by or on behalf of a person who is or has l)een 186 DOMINION COMPANIES ACT. Sects, engaged or interested in the formation of the compan}-. 43-43d. If, accordingly, tJie company makes a private sale of its sliares to a broker, the latter, nnless he is or was en- gaged or interested in the formation of the company, would api)ear to be at liberty to disregard s. 43 B on any subsequent sale of shares to the public made by himself and on his own behalf. If the document used is in the form of a circular which does not make an offer to the public it is not a "prospectus" as defined by s. 43 and therefore there is no obligation to make disclosure under s. 43B. ^rf^^^^iim-^ Sub-section (d) does not apply to an issue of bonds : mum sub- Burton V. Beven (1908) 2 Ch. 240. scnption. ' fh^^ven-"^^ If the company buys from an absolute owner dors. property which is to be paid for wholly or partly out of the proceeds of the issue offered for subscription by the prospectus, the name and address of the vendor and the amount of the consideration must be stated. But where the company's vendor has completed his purchase before the issue of the prospectus, the name of his vendor and the consideration on such prior pur- chase need not be disclosed: Brookes v. Hansen (1906) 2 Ch. 129. If the company buys merely the benefit of a con- tract for the purchase of property, the consideration for which remains undischarged in whole or in part, the company is a " sub-purchaser " and the superior as w^ell as the immediate vendor are "vendors" under the sub-section : Brookes v. Hansen, supra. Even where there is no obligation under sub-sec- tion (f ) to disclose particulars of a purchase, it may still be necessary for the company to give the dates of and parties to the purchase contracts, as being ma- terial contracts, under sub-section (k). s. 43B (1) A material contract is one which upon a reason- iai contracted able construction of its purport and effect, would assist a person in determining whether he would become a shareholder in the company: Sullivan v. Mitcalfe (1880) 5 C. P. D. 455. PROSPECTUS. 187 The provisions for inspection of such contracts Sects, indicate that contracts in writing only are covered by 43-43 d. the sub-section. Non-compliance ^^^th the statutory requirements of asTon-compU- s. 43B is excused under the circumstances set out in the Vction. sub-section 6. What the ''liability" under sub-sec- tion 6 may be is not stated. Various suggestions have been made as to the nature of the liability, and the persons by whom it may be enforced, as to which see Halsbury, vol. 5, p. 125, footnote (n). In framing a prospectus it is desirable to include Suggestions information on a number of matters not provided for paration'oT by tlie Act. The following matters in particular should prospectus. be dealt ^\ith in the prospectus : — 1. The name of the company should be correctly set out. 2. The authorized share capital should be stated, together with the amount of loan capital, bonds, deben- tures or debenture stock. If there are different classes or shares, viz., common and preferred, these should be specified, and particulars of rate of dividend on pre- ferred shares and voting rights of common and pre- ferred shares stated, and other details given, and the par value of the shares should likewise be stated. 3. The officers with their addresses and descrip- tions should be set out, and the bankers, transfer agents, auditors, solicitors, and brokers to the issue named. 4. A short statement of the assets and a summary of past profits should be given if the company has been in operation previously to the issue, or if a business has been taken over by the company. 5. It is well to give a general description of the business tlie company will carry on. 6. If the prospectus offers bonds or de))entur(» stock for subscription it sliould be stated tiiat a copy of the opinion of counsel on the legality of the issue is obtain- able or available for inspection. 188 DOMINION COMPANIES ACT. Sects. It is usual for the prospectus to be accomi)aiii('(l 43-43D. by form of application for the shares or bonds offered for subscription. Liability for This scctioii adopts the provisions of s. 84 of the in piospoc-^ Imperial Act of 1908, which have also been adopted by uiises. ... o ^ number of the provinces, and which orig^inally ap- peared in the Directors' Liability Act, 1890, passed to meet the effect of the decision of Derry v. Peeh (1889) 14 App. Cas. 337. There it was held that in an action of deceit the plaintiff must prove actual fraud, and that a false statement made through carelessness and without reasonable grounds for believing it to be true may be evidence of fraud, but does not necessarily amount to fraud; and further, that such statement, if made in the honest belief that it is true, is not fraudu- lent and does not render the person making it liable to an action of deceit. The practical effect of this decision would have been to leave those deceived by untrue statements in prospectuses without a remedy except where something practically amounting to pre- conceived and deliberate fraud in the publication of such statements could be shown. The onus is now placed on the directors and pro- moters and other persons who have authorized the issue of the prospectus to show reasonable grounds for believing in the accuracy of any untrue statement, and particulars of such grounds will be ordered where this defence is set up : Almon v. Opprrt (1901) 2 K. B. 576. Caution in In view of the stringent provisions of s. 48D, it is prospeiftus. most important for directors, promoters, and others connected mth the affairs of a company incorporated or about to be incorporated, that statements, within the meaning of the Act, should be cautiously made. Statements which it is proposed to include in the pros- pectus, notice or advertisement, or in any report or memorandum appearing on the face thereof, or in any report or memorandum referred to therein or issued therewith, and not purporting to be made on the autho- rity of an expert, or of a public official document or PEOSPECTUS. 189 statement, should be carefully eliminated unless eacL Sects, person who might be held responsible therefor has 43-43d. reasonable grounds to believe, and does believe, that ' such statements are true. The uncorroborated statements of a vendor-pro- moter afford bv themselves no reasonable ground for belief in their truth: Adams v. Thrift (1915) 2 Ch. 21. And if the statement is one purporting to be a state- ment by or contained in what purports to be a copy of cr extract from a report or valuation of an engineer, valuer, accountant or other expert, care should be taken, not only that such statement fairly represents the statement made by such engineer, valuer, account- ant or other expert, or is a correct and fair copy of or extract from the report or valuation, as the case may be, but also that there are reasonable grounds to be- lieve that the person making the statement, report or valuation, was competent to make it. In the case of one without personal knowledge on the subject, scant inquiry would scarcely be likely to supjily reasonable grounds of belief. The liability imposed by the Act is to pay com- Measure of })ensation to persons subscribing fo'r shares or deben- ^•^'"^^^8. tures on the faith of tlio prospectus for the loss or damages they may have sustained by reason of any untrue statement therein. The measure of damages is the difference between the purchase price and the fair value of the shares at the time of allotment: Mc- ComipJl V. Wrif/hf (1903) 1 Ch. 546; Shcpheard v. Broome (1904) A. C. 342; but if the purchaser docs not letain his shares, the measure of damages is the amount paid for them: Jolinson v. Johnson (1913) 14 D. L. R. 756. If a director, knowing that a prosjicctus is being issued, does not read it or make any enquiry as to its contents, and gives no notice under sub-section (c) (ii) (if s. 4.'!I) ( I ),it is too hitc foi- liiiii to i-('i)ndiate tlie i)ros- ix'ctus if he waits until ;iii action is ])i-()nght against him for damages for an untrue statement in tlie ])ros- pectus :Z>rmcri??ierv. }ynnfl (IR^O) 1 Cli. 393. tion. 1^^ DOMINION COMPANIES ACT. Sects. Tlio i)oriod of limitation within wliicli an action 43-43L). mnst be brought is six years: Thomson v. Lord Clan- Limitation. morHs (1900) 1 Ch. 718. Doiith of The liability under the section beine: founded on (liroctor . tort the maxim actio personalis moritur cum persona applies, and where a director is a defendant in an action brought under the statute the action will not survive against the executor in the absence of proof that the director's estate benefited by the tort: Geipel V. Peach (1917) 2 Ch. 108; 86 L. J. Ch. 745. Contriba- Sub-scction 4 of s. 43D enables a director to re- cover contribution from any other person who, if sued separately, would have been liable to make the same payment, unless the director who has become so liable, was, and the other was not, guilty of fraudulent mis- representation. Where a director who is being pro- ceeded against for contribution dies, such contribu- tion can be recovered against his estate : Shepheard v. Bray (1906) 2 Ch. 235. Where a director is suing under the sub-section, it is not sufficient to claim merelv contribution on account of the judgment obtained against him, and which he has paid. The statement of claim must allege the de- fendant's responsibility for the issue of the prospec- . tus, that the subscriber applied for the shares on the faith of it, and that he suffered loss by reason of one or more untrue statements therein: Johnson v. Johnson (1913) 14 D. L. R. 756, 761. And the plaintiff must establish such a case as a subscriber himself would "be required to make, if he were suing, ibid. The co-director should be brought in by third party notice: Gerson v. Simpson (1903), 2 K. B. 197. Remedies apart from the statute. The statute does not take away or affect the remedies which subscribers had at common law. In the following note the rights of subscribers who have been induced to take shares by misstatements in a prospec- tus are considered independently of the statute. The PROSPECTUS. 191 subject may be conveniently dealt with under tlie fol- Sects, lowing headings : 43-43d. 1. What misstatements mil entitle a shareholder to relief. 2. The nature of the relief obtainable. (1) Action for deceit. (2) Rescission. (3) Defence to action for calls. (4) Criminal liability of directors. 3. Who is entitled to relief? The duty of those who are responsible for the fram- ing of a prospectus is stated by Lord Chelmsford in Directors, etc., of the Central Raihvay Company of Venezuela v. Kisch (1867) L. R. 2 H. L. 99, at p. 113, as follows : ^'But although, in its introduction to the public, some high colouring, and even exaggeration, in the description of the advantages which are likely to be enjoyed by the subscribers to an undertaking, may be expected, yet no misstatement or concealment of any material facts or circumstances ought to be permitted. In my opinion, the public, who are invited by a pros- pectus to join in any new adventure, ought to have the same opportunity of judging of everything which has a material bearing on its true character, as the pro- moters themselves possess. It cannot be too fre- quently or too strongly impressed upon those who, having projected any undertaking, are desirous of obtaining the co-operation of persons who have no otli(!r information on the subject tlian that which they chose to convey, that the utmost candour and honesty ouglit to characterize their published statements. As •was said by Vice-Chancellor Kindersley in the case of the New Brunsivick and Canada Railway Company v. Muyyeridye, 'Those who issue a prosyiectus holding out to the public the great advantages which will accrue to persons who will take sliares in a proposed undertaking and inviting them to take shares on the faith of the representations therein contained, are bound to state cvervthing with strict and sci-npnlons !!)•_' KO.MIMON COMPANIES ACT. Sects. accuracy and iiol only to abstain from stating as fact 43-43i). that which is not so, but to omit no oue fact within their knowledge, the existence of which might in any degree affect the nature or extent, or quality of the l>rivileges and advantages which the prospectus holds out as inducements to take shares.' " 1. What misstatements will entitle a shareholder to re- lief. The misstatement must be one of fact and not merely of law: Beattie v. Lord Ehurij (1872), 7 Ch. 777. Nor a mere statement of intention : Edgington v. Fitzmaurice (1885) 29 Ch. D. 459. It must be material and have induced the share- holder to purchase the shares, e.g., where a company- alleged that it had, where in fact it had not, the privi- lege of selecting a *' compact choice tract of land" for the purposes of settlement free from the use of intoxi- cating liquors, that was a material representation: Temperance Colonisation v. Fairfield (1889) 16 0. R. 544. See also Hoivard v. Canadian, Sc., Co. (1914) 6 0. W. N. 285, 404. Both materiality and whether the subscriber was induced to act on the misrepresentation are questions of fact: Young v. Smith (1915) 21 D. L. R. 97, 8 A. L. R. 256. In that case the following statement from Halsbury, vol. 20, p. 699, was adopted: "It is suffi- cient to prove that in the ordinary course of events the natural and probable effect of the misrepresentation was to influence the mind of a normal representee in the manner alleged"; a representation that other shareholders had paid cash for their shares was held material, ibid. A misrepresentation made on a previous purchase of shares can be relied on where it remains uncor- rected when the subscriber subsequently takes a further block of shares still relying on the truth of the original misrepresentation: Fitzherhert v. Dominion Bed Mfg. Co. (1915) 23 D. L. R. 125, 21 B. C. R. 226. AVhere misrepresentation by non-disclosure is alleged it is not sufficient merely for the shareholder PROSPECTUS. 193 to say tliat if he had known the fact withheld he would Sects. not have taken the shares. He must go further and 43-43d. specify the particular statement which is inconsistent with the truth: In re Christeneville Rubber Estates, Ltd. (1911) 81 L. J. Ch. 63. Non-disclosure of a matter arising after the issue of a prospectus is insufficient and will not entitle a shareholder to relief in an action for deceit : Petrie v. Guelph Lumber Co. (1885) 11 S. C. R. 450. In the last mentioned case partners carrying on a lumber busi- ness sold the assets to a new company and issued a prospectus for the sale of the new company's shares. It was alleged by the plaintiffs that the fact of a mort- gage of the assets of the old company having been given to the old company's bankers after the issuing of the prospectus, but before stock was issued to sub- scribers, had not been disclosed. It was held that the mortgage having been given after the prospectus was issued could not have been mentioned in the prospectus and moreover that the shareholders had not suffered damage by such non-disclosure as the new company would have been liable for the old company's debt whether the mortgage had been given or not.* For an example of representations not entitling a subscriber to recovery of payment made for shares, see Kennedy v. Acadia Pulp and Paper Mills Company, Limited (1905) 38 N. S. R. 291. The misstatement must furthermore have been acted upon, i.e., tlie sliareliolder must have been misled and must have been induced by the misstatement to take the sliares. The shareholder's loss must have been attributable to the misstatements and he must have relied on sucli misstatements, per Lord Black- burn in Smith v. Chadwick (1884) 9 A. C. 187. 2. The nature of the relief obtainable. (1) Action for deceit. The distinction between the action for rescission of a contract to take shares and tlie action for deceit D.c.A.— m 194 i)o:mini()N companies act. Sects, is discussed in Petrie v. Guelph Lumber Co. (1885) 11 43-43D. S. C. II. 450. Our Courts have held that when the action is one for deceit the clearest evidence of misre- presentation must be given : Petrie v. Guelph Lumber Co., supra; B catty v. Neelon (1885) 12 A. R. 50, 1.3 S. C. B. 1; and that long delay on the part of the plaintiffs and their conduct in their dealings with the subject matter might disentitle them to relifif. Tb. Under the general law an action of deceit lies for misrepresentation in prospectuses, etc., upon the faith of which persons are induced to take shares in a company to their loss. It would seem that, to sup- port the action for deceit, there must be same mis- statement of fact, or, at least, such a partial statement of fact that the omission to state that which is not disclosed renders that which is stated absolutely false : Peek V. Gurney (1873) L. R. 6 H. L. 403. And see per Lord Watson, in Aaron's Reefs v. Twiss (1896) A. C. 273, at p. 287. The responsibility of those who issue a prospectus containing such misrepresentations may not extend to a transferee of shares. The measure of damages is the difference between the actual value of the shares at the date of the allot- ment and the amount paid by the shareholder : Peek v. Derry (1888) 87 Ch. D. 541 at p. 594. See also McLeay V. Tait (1906) A. C. 24. The fraud, if any, is on the part of particular indi- viduals, and the action is against them. At the same time, a company may be liable for the wrong of its servant by virtue of the well known principles of the law of agency, and no distinction can be drawn between an injury inflicted by reason of fraud on the part of the agent, and an injury caused by any other tort committed by him, per Lord Selborne: Iloulds- . worth V. City of Glasgoiv 'Bank (1880) 5 App. Cas. 317 at p. 326. And see New Brunsivick, etc., By. Co. V. Conybeare (1862) 9 H. L. C. 711, at pp. 725 and 740; Western Bank of Scotland v. Addie (1867) L. R. 1 H. L. (Sc.) 145,157. A claim for damages against directors under sec- tion 43 as well as a claim for deceit and a claim against PKOSPECTUS. 195 the company for rescission may be combined in one Sects. action: Frankburg v. Great Horseless Carriage Com- 43-43i). pamj (1900) 1 Q. B. 504, C. A. Fraud is an essential element and must be proved to enable the plaintiff to recover: Derry v. Peek (1889) 14 App. Cas. 337. The clearest evidence of misrepresentation is required: Petrie v. Guelph Limiber Company (1885) 11 S. C. R. 450; Beatty v. Neelon (1885) 12 A. R. 50; (1887) 13 S. C. R. 1. See also Clark v. Gray (1902) 1 O. W. R. 370. If the statement complained of was believed in by the directors, even if such belief was based on unreasonable grounds, the action fails. The state- ment must be sho^vai to have been made dishonestly: Angus v. Clifford (1891) 2 Ch. 449, and see also Petrie v. Guelph Lumber Company, supra. It is furthermore necessary for the plaintiff to fix the defendant with responsibility for the prospec- tus: F«rre?; V. Manchester (1908) 40 S. C. R. 339, and the fact that the directors had employed a broker to sell shares, in tlie absence of proof that they knew of the use of the prospectus containing the misstate- ments complained of before the sale of shares there- under to the plaintiff, was insufficient to fix them Avith liabilitv. (2) Rescission. Jn an action for rescission, just as in the action for Rescission, deceit, it is necessary to prove that the misrepresenta- tion complained of was material, that the plaintiff acted thereon and that he suffered damage. On the other liand it is not necessary to prove that the mis- statement was in.'ulc with intent to deceive. Tlie dis- tinction between the two remedies is discussed in Petrie v. Guelph Lumber Co. (1895) ] 1 S. C. R. 450. See also Abroy v. Victoria Printing Co. (1912) 21 0. W. R. 444, which was an action foi" rescission of a subscription or stock and the recovery back of tlie amount paid thereon. A divisional conrl, ad(»i)ling the wording used ill Augrl v. Jay (1011) 1 K. P.. (iiUi, h<-l. arc also directors) tt) ri'l'iiiid gifts made to tlicm by a vendor out of his profit on the sale of assets to the com- pany, see Craivford v. BatltKist Laud, cOc, Co. (1916) 37 6. L. K. 611 ; (1918) 42 O. L. R. 250; (19-20) 50 1). L. K. 457. Preliminary expenses and services performed before incorporation. By preliminary expenses are meant those connected with the formation and organization of the com- pany, such as the fee paid to the department of the Secretary of State on the issuance of the letters patent, the costs in connection with the preparation of the petition for incorporation, the holding of organ- ization meetings, the drawing of preliminary agree- ments, the preparation of the prospectus, the printing of share certificates, and the purchase and entering up of the books required to be kept by the company. Many of these items of expense will, and some of them must, be incurred before the company which benefits thereby comes into existence. The promoters or other persons who make disbursements or incur liabilities for a company to be formed must either intend to be personally responsible, or else, if they expect the company to reimburse them, it amounts to very much the same thing; they are attempting to contract as agents for a non-existing principal and the company when it comes into existence is not bound to reim- burse them or assume any of their liabilities : English and Colonial Produce (1906) 2 Ch. 435; Rotherham Alum Co. (1884) 25 Ch. D. 103. It is usual to insert among the company's powers a clause to the effect that it may pay preliminary expenses, and while there is nothing to prevent the company from doing so, the existence of such a power without more will not enable a promoter to claim repayment of his outlay : Empress Engineering Co. (1881) 16 Ch. D. 125. The promoter must prove a new, express contract by the company after formation to reimburse him : English and Colon- . ial Produce Co. (1906) 2 Ch. 435, or some facts must PKOMOTEKS. 213 exist from wliicli the Court can infer such an agree- Sects, ment: Va7i Hummell v. International Guarantee Com- 4:3-43i). pamj (1913) 10 D. L. R. 306. The principle applies to incorporation fees paid to the department as well as to other expenses: Clinton's Claim (1908) 2 Ch. 515. Where a company is incor- porated by private Act, it is not liable for the expenses of procuring incorporation in the absence of agree- ment or a provision in the Act that the Company shall be liable: Crown Mutual Hail Insurance Co. (1908) 18 Man. L. R. 51. This case is also important as regards the position of solicitors, since it was held that these have no equitable claim against the com- pany for the costs of procuring the passing of the Act. However, the company having already made a pajTiient to its solicitors on account of costs they were permitted to appropriate such pajnnent to pre-incor- poration costs. Even if the Act should contain the usual provision for payment of preliminary expenses solicitors retained by a promoter would have no direct claim against the company for such services: per Mathers, J., ihicL, at \). 53, citing Wyatt v. Metropolitan Board of Works (1861) 11 Q. B. N. S. 744, and Re Sker/ness (1889) 41 Ch. D. 215. Similarly where a promoter has performed services before incorporation he is not entitled to be indemnified in the absence of a new agreement : Van Hummell v. International Guar- antee Company (1913) 10 D. L. R. 306. A promoter cannot sue a co-promoter for remunera- tion for such services in the absence of express agree- ment, ihid. See also Holmes v. Hiyr/ins (1822) 1 B. & C. 74, and Patterson v. Broiru (1905) ('. O. W. R. 204. Somewhat similar in principle is the case of McNeil v. Fulh ( 1 1)07 ) .".s S. C. R. 198. There the plaintiffs were ti-ansfciTiiig mining ])i'o])erties to the det'endnnt, a promoter, wlio was to give them a proportionate share of the bonds and shares to be obtained by him on the flotation of a com[)any being formed to consolidate these with other })r()i)erties. The ])romoter, to enable him to carry one of the properties affected by the con- -l-t DOMINION COMPANIES ACT. Sects. sdlulatioii, was iorccd to borrow money i'roiii a third 43-43i). person, and, in order to obtain the loan was obliged to hand over to the lender a portion of the securities of the new company which he obtained in consideration of the transfer to it of the various properties. The pro- moter, accordingly, made a rateable deduction, which he did not declare, from the amount of the bonds he was to deliver to the plaintiffs. It was held that this deduction, in the absence of the plaintiff's consent, was not permissible either by way of salvage or to in- demnify the promoter for expenses necessarily incur- red in the preservation of the properties. Personal liability of promoters. A company being non-existent until it is incorpor- ated can not ratify what its promoters have purported to do on its behalf before that time. It may, of course, subsequently by a new contract assume a contract made by a promoter, but a resolution merely purporting to adopt or ratify what has been done is insufficient to bind the company: Lindley, 6th ed., p. 232, and see Duquesne v. La Compaqnie Generale ties Boissons Canadiennes (1907) Q. R. 31 S. C. 409. Even though parties subsequently carry out some of the terms of the contract in the supposition that it is binding on the company the rule that the company must expressly assume the contract still applies : Coitv.Doivlinf/ (1898- 1901) 4 Terr. L. E. 464, following Re Northumber- land Avenue Hotel (1886) 33 Ch. D. 16. Consequently, persons who contract obligations on behalf of a pro- posed company do so at their own peril, for if the com- pany, after incorporation, chooses to repudiate the obligation, they will be personally liable: Irwin v. Lessard (1889) 17 R. L. 589; and though the form of the transaction be the giving of security for an advance to a projected company the promoter is primarily liable, for the company not being in existence cannot be the principal debtor: Clergue v. Humphrey (1901) 31 S. C. R. 966. The liability proceeds upon the ordinary principles of the law of contract. As a general rule the same prin- PROMOTERS. 215 ciple applies to the right of the company to claim the Sects, benefit of the acts of promoters — unless both are bound 4:3-43d. neither is bound forms the general rule. But sometimes the express provisions of a statute may enable the com- pany to assert rights over property acquired or to claim the benefit of contracts made prior to incorporation. Promoters may not be allowed to hold for their own benefit property acquired by them on behalf of the company which they were engaged in organizing: Sea Coast R. R. V. Wood, 65 N. J. Eq. 530. Also the terms of the Act may be such that upon incorporation the legal title to property theretofore acquired for the proposed corporation is ipso facto transferred to it. But even in such cases it is wise to evidence the transfer by a conveyance. Where individuals intend to form a company but 0A\dng to non-compliance with the statute no company is created, but business is carried on and liabilities are incurred, they may find tliat they are in a sense part- ners and personally responsible to the creditors. See Seiffert v. Irving (1888) 15 0. R. 173. The distinction between the liability of such persons and that of ordin- arv partners is thus stated by Boyd, C, in Sandusky Coal Co. v. Walker (1896) 27 0. R. 677, at p. 681, "The wliole body of proposed corporators are not necessarily liable as partners in the case of the prosecution of business prior to incorporation, for the whole concern is not a partnership in that sense; but it is a quasi- partnership in this sense, that all those who take a practical part in the prosecution of the business or who sanction or ratify the conduct of affairs become liable as partners. The extent or proportion of liability be- tween themselves depends upon the number of shares held by each ; on this footing the profit and losses would l)e propoi-tioned among them. The practical differ- ence as to evidence is that in the case of partners all would be liablo Avithout notice "of the ol)ligation in- curred; in the other case some evidence must be given to show knowledge or notice and assent on the part of each person to be charged." LM(i DOMINION COMPANIES ACT. Sects. A mere agroeinent to take stock in an intended com- ^^'^•^'^- pany which proves abortive will not constitute the subscriber a partner in the undertaking: Sylvester v. McQuaig (1878) 28 U. C. C. P. 443. It has been held in the Province of Quebec that signing the petition for incorporation renders provisional directors liable jointly and severally for the fees of the solicitor em- ployed by tJie promoter to procure the incorporation of the company and before the company has in fact been incorporated: Anger v. Corneillier (1891) R. J. Q. B. 293 sed queer e. See also on the liability of cor- porators of a nominal corporation which has no legal status: Gildersleeve v. Balfour (1893) 15 P. R. 293. There is no personal liability when the contract is a provisional one only, to take effect upon the incorpora- tion of the company. As to the liability of persons who contract, not personally but as trustees for a company to be incorporated: see T. W. Hand Fireworks Co. v. Baikir (1913) 43 Que. S. C. 325. Promoters are not partners nor agents for one another. As a general rule promoters are not partners, although they may become liable as partners for the acts of their co-promoters ratified by them : Sandusky Coal Co. V. Walker, supra. Nevertheless it may often happen that the arrange- ment between the promoters, and their sanctioning and taking the benefit of contracts made on their behalf by certain of their number, or by persons acting in their interests, will render them all liable upon such con- tracts. Some of their number may be given or allowed to take upon themselves an authority to bind the others. And persons who are promoters may at the same, time become so associated by agreement that they are actually partners, when tliey will be liable for each others' acts as such: Howard v. Dingman (1907) 10 0. W. R. 127. See also Moore v. Ontario Ins. Associa- tion (1888) 16 0. R. 269; Nelles v. Ontario Ins. Ass. (1889) 17 0. R. 129; Hamilton d Co. v. Townsend (1886) 13 A. R. 534. It must be a question of fact in PROMOTERS. 217 everv case. Promoters are not, as such, agents for Sects, each other: Wilson v. Hotchkiss (1901) 2 O. L. R. 261, 43-43d. affirmed sub nom: T. Milhurn v. Wilson (1901) 31 S. C. R. 481. See also Hung Man v. Ellis (1895) 3 B. C. R. 486 ; but where promoters have been authorized to act as agents for their co-promoters, the hitter will be liable for the acts of the former according to the ordinary principles of the law of agency: Wilson v. IIotcMiss, supra. The company itself is not responsible for acts of the agents of promoters before its incor- poration in the absence of express adoption thereof: Gourlie V. Chandler (1906-7) 41 N. S. R. 341. Enforcement of collateral agreement by the company. A buyer of shares from a promoter may have an interest in compelling the promoter to carry out his obligations to the company. Where a promoter sold a portion of shares to the defendant and the latter main- tained that he had stipulated that his vendor should apply the purchase price towards payment of certain liabilities of the company in relation to its assets and the promoter sued the purchaser for payment of the purchase price the Supreme Court of Alberta oi banc stayed execution to enable the purchaser to enforce this term of the contract: Lazier v. McCullnurfh (1912-3) 6 Alta. L. R. 503. For a more extended and very clear discussion of the general law of Promoters in all its different aspects the reader is referred to Machen on Corporations, Vol. 1, sections 307 to 415. Holding Stock of Other Companies. 44. The company shall not under any circumstances use any Conditions of its funds in the purchase of stock in any other corporation, on which unless nor until the directors have been expressly authorized niayfmr- by a by-law passed by them for the purpose and sanctioned by a chase stock vote of not less than two-thirds in value of the capital stock ^,^^*^!fJ"j„„ represented at a general meeting of the company duly called tor consiflcring the subject of the by-law: Provided that if the proviso, letters patent authorize such purchase it shall not be necessary to pass sufh by-law. 2 E. VII., c. 15, s. 36. 218 DOMINION COMPANIES ACT. Sect. 44. Common law rule. Effect of section. At comnion law a corporation may not purchase or otherwise deal in the shares of other corporations with- out power so to do either express or to be implied from the nature of its business or objects. Brice, 3rd ed., p. 132. But the power mil be readily implied. See Royal Bank of India's Case (1869) L. R. 4 Ch. 252; Ex parte Contract Corporation (1868) L. R. 3 Ch. 105; Joint Stock Discount Co. v. Brown (1869) L. R. 8 Eq. 381. With regard to semi-public corporations it is well settled that they cannot, without express statutory authority, purchase, take or deal in the shares of other companies: Great Eastern R. Co. v. Turner (1872) L. R. 8 Ch. 149; Great Western R. Co. v. Metropolitan R. Co. (1863) 32 L. J. Ch. 38*2. But apparently a company may accept shares owned by a person indebted to it as a compromise for a debt if not taken with the intention of retaining them as an investment: Re Lands Allotment Co. (1894) 1 Ch. 616. See Canada Life Ins. Co. v. Peel Manufacturing Co. (1874) 26 Gr. 487. It is submitted that the section does not confer any additional power on a company to purchase shares be- yond the powers which may be implied by law or con- ferred by the Act. The Act itself does not in express terms confer on companies incorporated under it the power to use their funds in the purchase of shares of other companies. Accordingly, the power is to be sought for in the ex- press words of the letters patent or as ancillary to the powers thereby conferred and it is the usual practice to embody in the letters patent themselves the power to acquire shares of other companies. An instructive case on the question of the power of a company to invest in the shares of other companies is Re Atlas Loan Company, Elgin Loan Co.'s Claim (1905) 9 0. L. R. 250. The facts of this case were as follows : — The Elgin Loan Company had a large savings account with the Atlas Loan Company and in order to enable the Atlas Loan Company (which was authorized to invest in HOLDING STOCK OF OTHER COMPANIES. 219 shares which the Elgin Loan Company could not do) to Sect. 44. purchase a number of shares of a coal company, it was arranged that the Elgin Loan Company should lend the Atlas Loan Company $55,000, the amount required to purchase such shares on the security of a debenture of the Atlas Loan Company for that amount. The Elgin Loan Company was to be permitted to call in the loan whenever it saw fit and was also to hold the shares purchased as collateral security and was to be paid five per cent, interest on the money advanced, or at its option take the dividends on the shares, and w^as to receive one-half the difference between the purchase price and the selling price when the shares were sold. It was held by Meredith, C.J., that the transaction was a bona fide one, not merely a device to enable the Elgin Loan Company to invest in shares and the Elgin Loan Company accordingly was held to bo entitled on the winding up of the Atlas Loan Company to rank as a creditor. Section 44 merely imposes a restriction on the exer- Restriction, cise of the power in the case of companies which possess it, i.e., they may not use their funds in the pur- chase of shares of other companies without complying with the requirement of the section. It would appear that if shares have been acquired without the use of the company's funds for that purpose, the holding of such shares would be legal: Victoria Montreal Fire Insurance Co. v. Strome (1905) 15 Man. L. R. 645 (per Dulnic, C.J.) a case decided on the corresponding pro- visions of the Manitoba Companies Act, R. S. M. (1902) c. 30, s. G8. Perdue, J., however, thought tliat it was incumbent on the plaintiffs to show that the provisions of th(! Companies Act had been complied with when seeking to make the company liable for calls upon shares alleged to liave been purchased or subscribed for by it. On the main question lliis case is not aUogetlier satisfactory, I)ul)uc, C.J., hohliiig that the objection that there was no evidence tliat a l)y-law was passed not having been raised at the trial could not be given Sect. 44. Stock to be personal estate. DOMINION COMPANIES ACT. effect to on the appeal. Perdue, J., dissenting, held the opposite ; the Court being divided the appeal was dis- missed. See also Foley v. Barber (1909-10) 1 0. W. N. 40. If a company has not power to purchase shares in another company it will be liable to repay money ob- tained through a representation by its agent that it has such power: Whaley v. O'Grady (1912) 4 D. L. R. 485. No by-law is necessary if provisions are inserted in the letters patent authorizing the purchase ; and it is the usual practice to ask for such a clause in this application for incorporation. Capital Stock. 45. The stock of the conipaiiy shall be personal estate, and shall be transferable, in such manner and subject to all such conditions and restrictions as are prescribed by this Part or by the letters patent or bv the by-laws of the company. 2 E. VII., c. 15, s. 36. ■ See the notes to s. 64. Allotment of stock. 46. In so far as the stock of the company or any increased amount thereof is not allotted by the letters patent or the sup- plementary letters patent and when no other definite provision is made by such letters patent or supplementary letters patent such stock shall be allotted at such times and in such manner as the directors by by-law shall prescribe. 2 E. VII., c. 15, s. 37. General note on shares and their nature. Acquisition of shares. How one may become a shareholder. Subscription for shares before incorporation. Repudiation of subscription by subscribers to memorandum. Contract to take shares. Application. (a) Verbal application. (b) Application in writing. (c) Application under seal. Allotment. Mode of allotment. Notice of allotment and withdrawal of application. CAPITAL STOCK. 221 Repudiation of subscription after allotment. Sect. 46. Defences: — (1) Fraud or misrepresentation. (2) Conditional subscription. (3) Company other than the one in which shares were applied for. (4) No shares created which can properly be allotted. (5) Total failure of consideration. (6) Infancy. General note on shares and their nature. A share is an aliquot separate integral part of the authorized capital of a joint stock company. The capital may be divided into shares of one, two or more classes, known as ordinary and preferred. See also s. 7B as to shares without par value. In the absence of any special provision qualifying the rights incident to particular shares, each share is in point of law of the same character and possessed of the same attributes, and therefore entitles its holder in all respects to the same rights as are possessed by the holders of other shares. See Oakhank Oil Co. v. Crum (1883) 8 App. Cas. 65; Birch v. Cropper (1889) 14 App. Cas. 525. For example : A. is the holder of 100 shares of stock, each of the par value of $100, on which he has paid $10 per share, making his holding of stock $10,000, while his net cash iiivestnioiit is $1,000. B. is a holder in tlic same corii])aiiy of 10 sliares of the par value of $100 each, fully paid up, making his holding of stock $1,000, while his total cash investment is also $1,000. In the absence of any special provisions in the l)y-laws dealing with such set of circumstances, if the company declares a dividend of 5 per cent., A. will receive a dividend of $500 and B. will receive a dividend of $50, though their cash investment is the same, Sli;iies are not goods, wares or merchandise, within the seventeenth section of tlio Knglish Statute of PVauds: Watson v. Spralln/ (1M54) 10 Kxfli. 222; Colt V. Kdlervillc (1725) 2 V. Wins. :]()4. But see Evans v. Davies (1803) 2 Cli. 210. OO.) DOMINION COMPANIES ACT. Sect. 46. They are rather in the nature of choses in action, per Sir Charles Fitzpatrick, C.J., in Roche v. Johnson (1916) 53? S. C. R. 18, at p. 23. Nor were they goods and chattels within the meaning of the Ontario Execu- tion Act, R. S. 0. (1887) c. 64, s. 16, but the statute has since been amended to expressly include them, and see now R. S. 0. (1914) c. 80, ss. 12* ff. It is usually provided by the Execution Acts of the various Provinces of Canada that shares may be taken in execution under a writ Fi. Fa. goods, and the method of so doing is there prescribed. Acquisition of shares. Section 46 forms a very fragmentary portion of the law relating to the acquisition of shares, the subject dividing itself into (1) Application. (2) Allotment. (3) Acceptance by notice of allotment. Section 23 of the Imperial Act, 1862, 25 and 26 Vict, c. 89, provides that not only subscribers to the memor- andum of association but every other person who has agreed to become a member of the company, and whose name is entered on the register of members, shall be deemed to be a member of the company, but no similar provision is contained in The Dominion Act; conse- quently it is necessary, in so far as the English deci- sions on shareholders turn upon the particular word- ing of s. 23, to apply them with great caution to cases arising in our courts. How one may become a shareholder. A binding contract to take shares is entered into by an offer in that behalf being made, such offer being accepted, and such acceptance being communicated to the applicant or his agent. Acceptance includes both allotment and notice of allotment, neither of these two without the other constituting an acceptance. Under the Dominion Act a person may become a shareholder in any one of the following ways : — ACQUISITION OF SHAEES. 223 (1) By subscribing to the memorandum of agree- Sect. 46. ment prior to incorporation of the company. ' (2) After incorporation by agreeing with the com- pany to take shares. (3) By taking a transfer of shares. (4) By becoming the personal representative of a deceased shareholder. (5) Possibly, by allowing his name to be on the register of shareholders or otherwise holding himself out or allowing himself to be held out as a shareholder. In considering how one may become a shareholder and the rights and obligations of shareholders, regard must be had not only to s. 46, but also to the interpreta- tion of the term shareholder, which is defined in s. 3(d) as ''every subscriber to or liolder of stock in the com- pany and includes the personal representatives of the shareholder." A man may be none the less a shareholder because he has not paid for shares pending the ascertaining of their value : Re Gramm Motor, <&c., Co. and Bennett (1915-6) 35 0. L. E. 224; and see this case further for the distinction between an intending shareholder and a shareholder in praesenti. Subscription for shares before incorporation of com- pany. Every one who, before the issue of the charter, sub- scribes to the memorandum of agreement, becomes forthwith, upon the incorporation of the company, by virtue of s. 5 of the Act, a sliareholder ipso' facto hold- i)ig the number of shares for which lie has subscribed. Tliis is the case even though ho has not signed the peti- tion for incorporation and though liis name does not ai)i)ear in the charter: Modern Bedstead v. Toh'in (1908) 12 0. W. R. 22. The letters patent in the case of a Dominion com- pany create and constitute the petitioners ** and any others wlio h;ive become subscribers to the memoran- dum of agreorneiii," a body corporate : hoidihce's Case (1889) 16 A. U. noS; TiJsovlniro v. Cnderich (1885) 8 O. R. 565. ■J -4 DOMINION COMrANIES ACT. Sect. 46. The ineiiioranduiii of agreeiiient, tho signature of ~ wliieli makes the subscriber a shareholder on incor- poration, is the memorandum which accompanies the petition and is made \vitli tlie company to be formed as well as by each subscriber with the other. So where the memorandum signed was not the one which accom- panied the petition the signatory did not become a shareholder by virtue of the statute : Re Nipissiuff PJauwf/ Mills^ Rankin's Case (1909) 18 0. L. II. 80: Canadian Druggists v. Thompson (1910) 2 0. W. N. 1213, 24 O. L. R. 401 ; see also Re Port Arthur Waaon Co., Smyth's Case (1916) 9 0. W. N. 383 (1917) 12 0. W. N. 59; (1919) 57 S. C. R. 388; Re Dominion Milling Co., Dennis's Case (1915) 8 0. W. N. 496; Vilandre v. AlUe (1915) 22 D. L. R. 577; Magog Textile and Paint Co. V. Price (1887) 14 S. C. R. 664; Steevens v. London Steel Works Co., Delano's Case (1888) 15 0. R. 75. EngiisJi The following are some of the leading cases under decisions. j^y^q Imperial Companies Act of 1862 or similar legisla- tion : — The original subscribers to the memorandum of agreement are by the Act deemed to have taken the shares set opposite their names: Evans's Case (1867) L. R. 2 Ch. ^27',Migotti's Case (1867) L. R. 4 Eq. 238. In the case of such subscribers no allotment is neces- sary: Re London and Provincial Co. (1877) 5 Ch. D. 525, and tliey are bound to take the shares from the company and pay for them: Mackley's Case (1875) 1 Ch. D. 247 : Alberta Improvement Co. v. Peverett (1914) 7 D. L. R. 314; (1914-5) 7 W. W. R. 757. Repudiation of subscription by subscriber to memoran- dum. As has been stated above upon the issue of the letters patent the subscriber becomes a shareholder and no further act by the company, such as allotment, is necessary: In re London Speaker (1889) 16 A. R. 508; Patterson v. Turner (1902) 3 0. L. R. 373, 377; Ber- geron V. Jonquiere (1913) 22 Que. K. B. 341; In re Haggart, Peaker d Runion's Case (1891-2) 19 A. R. 582. " ACQUISITION OF SHARES. 225 Tlie signing of the memorandum of agreement Sect. 46. under seal is an irrevocable act and the doctrine of Nelson Coke and Gas Company v. Pellatt (1904) 4 0. L. R. 481, applies, per Boyd, C, in Modern Bedstead v. Tobin (1908) 12 0. W. R. 22. It has been held that an incorporator is not entitled to repudiate on the ground of fraud: Bergeron v. Jonquiere, supra; Buff Pressed Brick Co. V. Ford (1915) 8 0. W. N. 63. See also In re Metal Constituents, Limited (1902) 1 Ch. 707, and it is submitted the same rule applies to one who is not a petitioner but Avho has signed the memorandum of agreement. In Patterson v. Turner (1902) 3 0. L. R. 373, it was not proved that the memorandum of agree- ment signed by the defendant was the one accompany- ing the petition, otherwise the action against the sub- scriber might have been successful, per Britton, J., at p. 377, although the terms of the prospectus had not been complied with. It was stated in Modern Bedstead V. Tobin, supra, per Boyd, C, at p. 25, that the sub- scriber can not repudiate unless he can show such a • state of facts as would justify a rescission of the con- tract by the Court, and in Bergeron v. Jonquiere (1913) 22 Que. K. B. 341, it is suggested at p. 353 that the shareholder might have a right of action to dissolve the relation between himself and the company. Contract to take shares. The better opinion appears to be that there is no difference between a contract to take shares and any otlicr contract; a formal agreement is not necessary. If in substance an agreement is made the form is not material, and the question whether a person has agreed to })(;come a shareJiolder will turn upon the facts of each particular case. See Re Bolt and Iron Co., Hovendcn's Case (1884) 10 P. R. 434; Halifax Carette Co. V. Moir (1895) 28 N. S. R. 45. See also Halifax, dc, Co. v. McManus (1894) 27 N. S. R. 173; In re Moore Bros. Co. (1899) 1 Ch. 627. The contract need not be sanctioned by by-law : Re Bishop Engraving and Printing Co., Ex parte Hoivard (1887) 4 Man. R. 429. D.C.A. — 15 226 DOMINION COMPANIES ACT. Sect. 46. The usual metliocl by w liicli such au agreomeut is constitutecl is an application for shares by the intend- ing shareholder and allotment by the directors of the company to him of the shares applied for. Application. An application to be binding must be made to the comi)any, and no contractual relation between the ap- plicant and the company is established where, e.g., the application is addressed to a syndicate holding the shares of the company: Consumers' Cordage Co., Ltd. V. Molson (1912) 2 D.' L. R. 451. But where the appli- cation read "We, tlie undersigned, severally subscribe for and agree to purchase from Edward Slade & Co. ' ' the shares in question ; in the absence of evidence that felade had agreed to take up the issue of shares himself and sell them on his own behalf, it was held that the application was really made to the company who could enforce it: Forget v. Cement Products Co. (1916) 28 D. L. R. 717. If it had been an offer to buy shares from Slade his transferring it to the company could not enable the latter to sue, ibid, at p. 722. Tlie application may be made either in person or by an agent duly authorized, and where made through an agent the ordinary principles of the law of agency apply: Davidson v. Grange, 4 Gr. 377; Chisholm's Case (1885) 7 0. R. 448. See also Cote v. Stadacona Insur- ance Co. (1881) 6 S. C. R. 193; Ramsgate Hotel Co. v. Montefiore (1886) L. R. 1 Ex! 109; Pentelow's Case (1869) L. R. 4 Ch. 178; Ingersoll and Thamesford Gravel Road Co. v. McCarthy (1858) 16 U. C. R. 162; Ottaiva Dairy Company v. Sorley (1906) 34 S. C. R. 508. A company employed local agents to obtain sub- scriptions for stock on terms of a commission on shares subscribed. At the solicitation of one of these agents C, intending to subscribe for five paid up shares, paid $500 and signed the subscription book, the columns for the amount of the subscription and the number of shares being at the time left in blank. The columns were afterwards, in C. 's presence but without APPLICATIOX FOR SHAEES. 227 his consent, filled in by the agent of the company by Sect. 46. inserting the words fifty shares. Having discovered his position, C. endeavored, but ineffectually, to induce the company to relieve him of the larger liability. The company afterwards declared a dividend of ten per cent, on the paid-up capital and the plaintiff received a cheque for $50.00 for which he gave a receipt. In an action for calls on the fifty shares, held, reversing the judgment of the Court below, that the evidence showed that C. never entered into a contract to take fifty shares, that the receipt given for a dividend of ten per cent, on the amount actually paid was not an admission of his liability for the larger amount, and that he there- fore was not estopped from showing that he was never in fact holder of the fifty shares: Cote v. Stadacona Insurance Co. (1881) 6 S.'C. K. 193. A subscription for shares by a person in his own name but really as a trustee, is valid: Davidson v. Grange (1854) 4 Gr. 377. The application for shares may be (a) verbal; (])) in writing; (c) in writing under seal. (a) Verbal application. Owing to the fact that s. 3 (d) of the Act defines the term " shareholder " as " every subscriber to stock in the company " it has been argued that every applica- tion for shares nuist be in writing subscribed by the ajiplicant. See the definition of subscriber by Osier, J.A., in Re London Speaker Printinrj Co. (1889) 16 A. R. 508, at p. 510, as " a person who has put down his name to a contract, l)y which he binds himself to con- tribute to the extent of the numl)er of shares for which he puts down his iiame." See also on the point the argument for tlie appellants in He Queen City Befininq Co. (1885) 10 (). T?. 2(54. However, it has been held that a person may become a shareholder without signing any written Mgrccnicnt to take shares: Caston's Case (1S,S5) 12 A. K. 4S(;; Union Firr Insurance Co. v. O'Cara (1883) 4 O. R. 359; in Xalional v. Egleson (1881 ) 29 Gr. 40G a holder of stock was held estopped from setting up that he had not subscribed. 228 DOMINION COMPANIES ACT. (b) Application in writing. Sect. 46. ll i^ important that the subscription shouhl autho- rize the allotment of a smaller number of shares than the number applied for, for otherwise the allotment of a lesser number will entitle the applicant to repudiate : /;.r parte Boberis (1852) 1 Drew 204:; lie Barber (1852) 15 Jur. 51. As to what amounts to an application for shares see Re Dominion Millmg Co., Dennis's Case (1915) 8 0. W. N. 496. Where preference shares are subscribed for on terms that the subscriber shall receive in addition a certain number of common shares, the company before taking action for the enforcement of the subscription need not do more than declare itself ready to deliver the common shares on payment; it is not necessary that the company should actually offer the bonus shares to the subscriber and deposit them in Court: Forget v. Cement Products Co. (1915) 24 Que. K. B. 445, affirmed in Privy Council (1916) 28 D. L. E. 717. (c) Application under seal. The doctrine of Nelson Coke and Gas Co-, v. Pellatt (1904) 4 0. L. R. 481, in which it was held that an ap- plication under seal can not be withdrawn, makes the distinction between ordinary, applications in writing and those under seal important. The matter is dis- cussed below under "withdrawal of application." It is accordingly important to consider what consti- tutes an a.pplication under seal and the better opinion would appear to be that the instrument must have been intended by the parties to be under seal and actually have a seal affixed, and the mere printing of a form of seal on the paper opposite the signature without refer- ence to the seal is insufficient : Farmers Bank v. Sun- strum (1909) 14 0. W. R. 288;. Connor Ruddij Co. v. Robinson Whyte Co. (1909) 19 0. L. R. 133. As to what will and what will not constitute a docu- ment under seal see Regina v. St. Paul Garden, 14 L. J. M. C, 109. In Re Sandlands, L. R. 6 C, P. .411; Marchant v. Morton (1901) 2 K. B. 832; i^a^^e v. Kilts, ALLOTMENT. 229 Tay. R. 269; Clement \\ Donaldson (1853) 9 U. C. R. Sect. 46. 299; WhiUier v. MacLennan (1856) 13 U. C. R. 638; Hamilton v. Dennis (1866) 12 Gr. 325; Bell v. Black (1882) 1 0. R. 125; Thompson v. Skill (1908) 12 0. W. R. 1033, and (1909) 13 0. W. R. 887. Allotment. The general principle to be applied is that there must be, first, a subscription or proposal by the sub- scriber; secondly, an allotment or acceptance by the company, and thirdly, notice of such allotment to the subscriber. An unaccepted subscription cannot be enforced: Duclos V. Bnode.au (1914) 47 Que. S. C. 205; and every subscription for shares must be accepted, if at all, as it is given : Halifax Carette Go. v. Moir (1895-6) 28 N. S. R. 45. See also on acceptance of application: Re Port Arthur Wagon Co., Price's Case- (1915-6) 9 0. W. N. 358; Re Federal Mortgage Corporation and Kipp (1916-7) 24 B. C. R. 12; Re Bishop Construction Co., /.^^. (1914) 15D. L. R. 911. The meaning of the term '' allotment " is discussed Meaning in NicoVs Case (1884) 29 Ch. D. 421, where Chitty, J., "Vnrment.' at p. 426, said: '' There is no difference as has often been pointed out between a contract to take shares and any other contract. What is termed 'allotment' is generally neither more nor less than the acceptance by the company of the offer to take shares. To take the common case, the offer is to take a certain number of shares, or such a less number of shares as may be allotted. Tliat offer is accepted by the allotment either of the total number mentioned in the offer or a less number to be taken by the person who made the offer. Tliis constitutes a binding contract to take that num- ber according to the offer and acceptance. To my mind there is no magic whatever in the term 'allot- ment' as used in these circumstances. It is said that the allotment is an appropriation of a specific number of shares. Tt is an appropriation, not of specific shares, but of a certain number of shares. It does not, how- -30 DOMINION COMPANIES ACT. Sect. 46. ever, make the person who has thus agreed to take the sliares a inoniber from that moment; all it does is simply this — it constitutes a binding contract under which the company is bound to make a complete allot- ment of the specified number of shares and under , wliicli the person who has made the offer, and is now bound by the acceptance, is bound to take that parti- cular number of shares. In most cases the act of placing the person who has agreed to become a mem- ber on the register is a mere matter of form, and may be described as a mere ministerial act; but it apx)cars to me that in point of law all that is done by the process I have just indicated and all that was done in this case, was to make a complete arid binding contract. ' ' AUotment ' Allotment is a necessary element in the contract to necessarj. ^^|^^^ shares: Be Zoological Society of Ontario. Cox's Case (1889) 16 A. R. 543; Be Bolt & Iron Co., Hoven- den's Case (1884) 10 P. R. 434; see also Be Dominion MiUing Co., Denvis's Case (1915) 8 0. W. iNF. 49(5; Be Canadian Tin Plate Co., Morton's Case (1906) 12 0. L. R. 594; Bohertsonville v. Bilodeau, 46 Que. S.C. 5. The contrary view was maintained in Boscony v. Desmarais (1886) 2 M. L. R. S. C. 381, and Boyers v. Hersey (1864) 15 L. C. R. 141, but these cases are not likely to be followed elsewhere than in the Province of Quebec. The above rule is subject to the qualification that conduct may take the place of formal subscription and allotment : In re Gramm Motor Truck, Sc, Co. (1915-6) 35 0. L. R. 224, 231, as, e.g., where a person allows his name to remain on the register and acts as the owner of shares. See also Morrisburgh and Ottawa v. O'Connor (1915) 34 0. L. R. 161; Be British Cattle Supply Co., McHugh's Case (1919) 16 0. W. N. 62, 206. And in Alberta Boiling Mills v. Christie (1919) 58 S. C. R. 208, Anglin, J., at pp. 217, 218, said: "Allot- ment is no doubt essential in the ordinary case. But the entry of it in the directors' minutes is merely evi- dentiary. The absence of such entry and of a formal notice of allotment are not conclusive against member- ship. The evidence which they would afford may be ALLOTMENT. 231 supplied, as I think it was in this case, by the issue and Sect. 46. delivery of share certificates and the sending of the "" notices of meetings followed by the giving of proxies." As to the necessity for allotment to make a share- • holder in a company re incorporated as a Dominion company by special Act a shareholder in the new com- pany even when he has received dividends from the new company, see Re Dominion Trust Co. and Allen (1917) 37D. L. R. 251. Mode of allotment. In cases concerning allotment arising under the Act, due regard must be had to section 46, which states that in default of other provision in the letters patent stock is to be allotted ''at such times and in such manner as the directors by hy-laiv shall prescribe." Accordingly, cases decided under Acts which state that shares shall be allotted when and as the directors by bv-law or otherivise ordain should be applied with 'caution. See EiWs Case (1905) 10 O. L. R. 501, and Robert v. Eastern Totvnships Rank (1908) Que. 17 K. B. 157, at p. 159. In the former case a subscriber was debited in the company's stock ledger witli tlie shares applied for, was i)laced on the list of shareliolders and having been drawn on for the first payment of ten per cent, paid the draft. It was held that these facts constituted a mode of allotment "ordained" by the directors within the meaning of the existing Ontario Companies Act (1897) R. S. 0. c. 191, s. 26. Under the Dominion Act the proper method of procedure is to pass a general by-law providing that shares may be allotted by resolution of the directors ; or to make each allotment by by-law. But in Re Port Arthur Wafion Co., Price's Case (1915) 8 0. W. N. 480, (1915-6) 9 b. W. N. 358, the allotment was by resolu- tion and the contributory was held to be bound. See also Port Arthur War/on Co., Smyth's Case (1915-6) 9 0. W. N. 383, 384, adirmed (1917) 12 O. W. N. 59, but reversed on other grounds (1919) 57 S, C. R. 388. 23*2 DOMINION COMPANIES ACT. Sect. 46. A spocilic allolmoiit is proved l)y production of the j.,.^,,^,- „,- ^ minnte book of the board of directors containing the aiiotin.Mit. niinntes of the meeting at which the allotment was .made and by proving the posting of the letter contain- ing the notice of allotment: North-West Battery v. Ear graves (1913) 23 Man. L. E. 923; 15 D. L. R. 193. For the latter purpose it is nsual and desirable that the company's mailing clerk should make a declaration of posting in the usual form. Allotment can also be shown by inference and im- plication as well as by express words, e.g., subsequent payments made by the subscriber and accepted by the company,it has been held, will support an inference that an application has been accepted and shares allotted: Pierson v. Crystal Ice Co. (1917) 2 W. W. R. 1175, 1253, affirming (1916) 29 D. L. R. 569. So also the issue and delivery of share certiticates and the sending of notices of meetings followed by the giving of proxies may supply the evidence, which entry of allotment in the minute book and the giving of for- mal notice would afford: Alberta Rolling Mills v. Christie (1919) 58 S. C. R. 208, 217, 218. The by-law passed by the directors may, of course, prescribe some manner of allotment which jjuts the dis- posal of stock out of the power of the directors, e.g., the by-law may provide that the shareholders shall allot the stock, and if such by-law has been confirmed by the shareholders the directors thereafter have no power to pass a by-law directing its repeal and pro- viding for allotment of shares by themselves. See Stephenson v. Yokes (1896) 27 0. R. 691. Formal As regards formal requisites, if the subscriber ex- requisites. pressly waives statutory formalities in connection with allotment he may be bound by an irregular and in- formal allotment: Fort William Commercial Chambers V. Braden (1913) 6 0. W. N. 24; (1914-5) 7 0. W. N. 679; and see Smart v. Boivmanville Machine, Sc, Co., 25 U. C. 503, at p. 510. Likewise a shareholder may be estopped by his conduct from setting up the irregu- larity of an allotment: Union Bank v. Gourlay (1916) 31 D. L. R. 565; (1917) 37 D. L. R. 599. ALLOTMENT. 233 It is not necessary to identify with denoting nuni- Sect. 46. bers the particular shares allotted^ although it is sound practice to do so: National v. Egleson (1881) 29 Gr. •406. Under Acts based on the Imperial Act, e.g., the Alberta Act s. 26, such numbering is compulsory. A resolution allotting "all shares of stock sub- scribed for and transferred to date" is too vague: Mc- Curdij V. Oak Tire, dc, Co. (1919) 44 0. L. E. 571, 574. The dutj^ of allotting shares is a matter for the board, and if the board of directors is incomplete, or if a board greater in number than that authorized by the charter attempts to act an allotment by them is in- effectual: Re Nutter Brewery Co. (1909) 1 0. W. X. 400; Tivin City Oil v. Christie (1909) 18 0. L. R. 324; Re Carpenter, Ltd., Hamilton's Case (1915-16) 35 0. L. R. 626. As to allotment by a de facto board see Traders Trusts v. Goodman (1917) 37 D. L. R. 31. Nor can tlie power be delegated by the board to one of their number or to an officer of the company : Re Bolt and Iron Co. (1884) 10 P. R. 434; Pakenham Pork Packing Co., Galloivay's Case (1906) 12 0. L. R. 100; Tivin City Oil v. Christie (1909) 18 0. L. R. 324; Hig- ginbotham-'s Case (1906) 12 0. L. R. 112; see also Fischer v. Burland Carriage Co. (1906) 8 0. W. R. 579, where under the special circumstances of the case the subscriber was held to be bound. The Act contains no provisions as to the appointment of an executive com- mittee of the directors and the power accordingly is one which must be exercised by the directors as a board. If tliere has been no allotment in fact the sending out of notices of calls will not operate to bind the sub- scriber : Re Canadian Tin Plate, Morton's Case (1906) 12 O. T.. R. .594. An nllotment may be ineffective because ultra vires ineffective of the directors. The following are examples : — Where "^'"*™^"^- di lectors on an increase of cajntal allotted shares to tlioms(!lves at par so as to alter the control of the com- jjumvirea pany the allotment was declared invalid: Martin v. Gih.Hon (1908) 15 O. T.. R. 623. The same result fol- lowed where directors made a one-sided allotment of the 234 DOMINION COMPANIES ACT. Sect. 46. balance of tlio authorized share capital with a view to the control of the voting power: Bonisteel v. Collis Leather Co. (1919) 45 0. L. R. 195; Pierc^ v. S. Mills S Co. Lini. (1919) 88 L. J. Ch. 509. See also Stvayze v. Grobb (1915) 8 0. W. N. 316. While it cannot be said that in all cases the directors are bound to offer to existing shareholders pro rata any treasury shares proposed to be issued it is the proper and safe course where the shares are worth more than par. An allotment which is part of a colorable transac- tion to enable a company to issue shares at a dis- count is ultra vires: Lindsay v. Imperial Steel and Wire Co. (1910) 21 0. L. R. 375. If the statutory condi- tions precedent to the valid creation of the stock, e.g., preference shares, have not been complied with, then, there being no shares of the kind specified to allot, an allotment will be a nullity : Manes Tailoring Co. v. Will- son (1907) 14 O.L.R. 89, and see Pakenham Pork Pack- ing Co., Gallotvay's Case (1906) 12 0. L. R. 100. There is no authority in the Act to enable a company to issue half shares, and in a case decided under the Ontario Act it was held that the holder of a half share was not liable thereon in a winding-up: McGill Chair Co., Munro's Case (1912) 26 0. L. R. 254. Shares It is illegal to issue shares at a discount; and discount. although au agreement to allot shares at a discount accepted by the subscriber does not create an enforce- able contract before tlie shares are issued, after the shares have been issued to the shareholder he may be guilty of such acts of acquiescence as to disentitle him- self to be relieved in a winding-up : Re McGill Chair Co., Munro's Case (1912) 26 O.L. R. 254. In this case the acts of the subscriber, which it was held showed that he had acted as a shareholder, wei"e giving a proxy in which he was described as holder of the shares in respect of which he was sought to be made liable, at- tending two meetings of shareholders and voting at a shareholders' meeting at which it was resolved that all ALLOTMENT. 235 bonus stock (which inchided his shares) should be "re- Sect. 46. called into the company. ' ' See also In re James Pilkin d Co. (1916) 85 L. J. Ch. 318 ; Bank of Ottawa v. Jones (1919) 46 D. L. R. 407, and cases cited; and, on sub- scription at a price below par: Burden v. Stanford (1915) 21 D. L. R. 209; 48 N. S. R. 532. On the other hand a company is not bound to issue At less than its shares at a price above par because they are quoted JSue!*^ at a premium: Harris v. Sumner (1908) 5 E. L. R. 1 61 ; Hilder v. Dexter (1902) A. C. 474, at p. 480 ; and it is not illegal for the company to give to a subscriber in consideration of his taking shares an option to take up at a future date further shares at par: Hilder v. Dexter, supra. A company can not in answer to an application for Transfer shares, instead of allotting treasury stock to the sub- share^'^ scriber, cause to have transferred to him shares already issued to another person : Fitzherbert v. Dominion Bed Mfg. Co. (1915) 23 D. L. R. 125, 126; and see Interna- tional Casualty Co. v. Thompson (1913) 48 S. C. R. 167; 11 D. L. R. 634. And where the applicants repu- diate such shares promptly on learning that they have not been allotted the shares applied for, they will not be liable as contributories : Western Union Fire Insur- ance Co. v. Alexander Log gin and Holmes (1918) 39 D. L. R. 632. If, however, it is shown that the company had shares available for allotment, a tender to the sub- scriber of shares which had been issued to the presi- dent of the company and purported to have been surrendered will not of itself invalidate the allotment: Graham Island Collieries v. McLeod (1914) 16 D. L. R. 281. Tf a company does not issue a prospectus on or with statement reference to its formation shares may not be allotted ('".Ispec'ius. until a statement in lieu of a prospectus -has been tiled in compliance with s. 43C (1). 'Hiere is no require- ment in the Dominion Act corresponding to s. 112 of the Ontario Act forbidding the allotment of any shares 2o(J DOMINION COMPANIES ACT. Sect. 46. offered to the public for subscription unless the amount Payment of P'^Vi^ble Oil application has been paid. Where such a deposit. provision exists the directors when proceeding to allot- ment should examine the company's pass book to see whether the cheques for payment of the deposit have been honored: Bravery Assets Co., Trueman's Case (1894) 3 Ch. 272. Allotment Any shareholder is entitled to bring an action for pfomfs* or • cancellation of shares in respect of which a certificate note. ■ for fully paid shares has been issued against a promis- sory note, but the cause of action is at an end when the note is paid: 0' Sullivan v. Donovan (1906) 8 0. W. R. 320, reversing (1906) 7 0. W. R. 78. However, in otlu^r cases it has been held or assumed that shares might be allotted on receipt of a promissory note: Anglo-Am- erican Lumber Co. v. McLellan (1908) 13 B. C. R. 318, (1908) 14 B. C. R. 93; Standard Bank v. Stephens (1908) 16 0. L. R. 115, where the cases are collected at p. 121; Canada Furniture Co. v. Banning (1918) 39 D. L. R. 313; Adair v. British Crown Co. (1915) 24 D. L. R. 905. Where a subscriber has given a promissory note and has received and kept the share certificate he can not evade liability on the note on the ground that it was obtained on a representation which was not ful- filled. His remedy in such case is an action or counter- claim for damages for breach of warranty: Graver Tank Works v. Morris (1916) 28 D. L. R. 696. (Man. C. A.). Allotment Allotment may under certain circumstances be wmu"^^*^ unnecessary and a valid contract for the issue of shares may be entered into by a proposal on the part of the company to issue shares or sell treasury stock through a duly authorized agent, and acceptance of this proposal by the purchaser of the shares : see Metro- politan Fire Insurance Co., Wallace's Case (1900) 2 Ch. 671, where Cozens Hardy, J., considers the distinc- tion between an application for shares and the accept- ance of a prior offer from the company. Section 46, however, would seem to preclude the possibility of ALLOTMENT. 237 such action and to require that every share to be Sect. 46. validly issued must be allotted by the board of direc- tors. But it has been held under the Ontario Com- panies Act that under certain circumstances formal allotment may be unnecessary: Re Gramm Motor Truck (1915) 35 0. L. R. 224, and see Bouletv. Houdon (1917) 51 Que. S. C. 29, Re Winding-up Ad and Cana- dian Tractor, dc, Co. (1914-5) 7 W. W. R. ^oQ2;Pineau V. St. Laurent (1916) 25 Que. K. B. 210. In Acadia Loan Corporation v. Wentivorth (1884- 1907) 40 N. S. R. 525 where an application was made from the agent of the company to the defendant to take shares and the defendant agreed with the company to take a definite number of shares and pay calls thereon, it was held that the transaction was complete and the defendant became a shareholder, although no shares were formally allotted to him and he received no notice of allotment. The company in question was incorporated by private Act of the Dominion Parlia- ment (1900) c. 86. The above case followed European and North American Ry. Co. v. McLeod (1875-76) 16 N. B. R. 3. There the authorized agent of the company applied to an individual and requested him to take shares in the company, and he assented and signed a stock list for a definite number of shares. It was held that the offer coming from the company and being accepted by the defendant, a complete contract was formed and nothing more was needed to complete the transaction. In Anfjlo- American Lumber Co. v. McLellan (1908) 13 B. C. R. 318'; (1908) 14 B. C. R. 93, the defendant purchased a definite number of shares in the company and gave his note therefor, signing at the same time an application for the shares. The presideiit of the com- ])any placed the shares and note in a bank, the shares to be delivered up on payment of the note. There was no formal jillotment beyond a resolution empowering the president to dispose of the shares. Clement ;ni(l Irving, .T.F., in liolding tliat the defendant became owner of tiic siuires on tiie signature of the application 238 DOMINION COMPANIES ACT. Sect. -16. and the clolivery oi' the note, apix'arecl to treat the transaction as a present purchase of the stock. The Court of Appeal in the province of Manitoba held that an agreement to take shares although accom- panied by a promissory note in part payment is nothing- more than an application and is not binding without acceptance by the company and notification thereof to the applicant: Kruger v. Ilarivood (1907) 16 Man. L. R. 433. In that case Mathers, J., whose judgment was affirmed on appeal, said at p. 434, " although the stock book signed by him (the subscriber) has a head- ing in the form of an agreement to take stock sub- scribed for, I think it amounts to nothing more than an application for stock, which the company had a right to accept or reject, and that it did not become an agreement until accepted by the company, and notice to the defendant of such acceptance." Where there has been no formal acceptance of the application and no allotment the parties are bound only l)y completed acts, e.g. payment of sliares and receipt of certificates : lie Dominion Millinr} Co., Den- nis's Case (1915) 8 0. W. N. 496. See also Re Nagrella Co., Ltd. (1915) 8 0. W. N. 452, where there were great irregularities, and Liquidator of the Mon- arch Oil Co. V. Chapin (1917) 37 D. L. R. 772. In Western Canada Fire Ins. Co. {Craig's Case) (1914) 19 D. L. R. 170, it was held that the receipt of share certificates following allotment and their reten- tion without repudiating their ownership may estab- lish a priyna facie case of liability as a contributory; and, of course, if a person does acts which amount to an admission that he is a shareholder, that is suffi- cient to make him liable as such, though there may be no evidence of application or allotment, e.g., where he transfers some of the shares in question and acts as a director: Re Wiarton Beet Root Sugar Co., Alexan- der McNeill's Case (1905) 10 0. L. R. 219. See also Re Port Arthur Wagon Co., Smyth's Case (1919) 57 S. C. R. 388. ALLOTMEXT. 239 Notice of allotment and withdrawal of application. An offer to take shares, like any other offer, is not Sect. 46. binding until it is accepted and acceptance takes place Necessity by allotment pursuant to the application. It is fur- for notice, thermore necessary that there should be a communica- tion of the allotment to the applicant to complete the contract: Re Canadian Mail Orders Limited (1910) 2 0. W. N. 882. The necessity of communicating the allotment to the applicant is laid down in Pellatt's Case (1867) L. R. 2 Ch. 527, where Lord Cairns says : — "I think that where an individual applies for shares in a company, there being no obligation to let him have any, there must be a response by the company, other- wise there is no contract. ' ' Notice of allotment within a reasonable time is necessary to bind the shareholder. The decision turned largely on the words of the application: Nasmith v. Manning (1880) 5 S. C. R. 417. In Vilandre v. Allie (1915) 22 D. L. R. 577, it was held that an application could not be accepted by the company two years after it was made so as to bind the applicant, where the latter had paid nothing on his subscription and the company in the meantime had become insolvent. Although allotment has not been communicated to the subscriber, he may be liable to a third ])arty who is a holder in due course of a note given by the subscriber to the company in pn>Tnent for the shares: Standard hank v. Stephens (1908) 16 0. L. R. 115. Notice of allotment may be given orally or in writ- iiow given, iiig or by conduct: Northwest Battery v. Ilarf/rave (1913) 15 D. L. R. 193, 205; Gunn's Case (1867-8) 3 Ch. Af)p. 40, 45; and it has been held that taking the su})S('riber's money on account of his shares is conduct from which acceptance must l)e inferred: Northwest Battery v. Jlaryrave, supra; Re Windiny-Up Act and Canadiiui Tractor, dc, Co., Svaiyher's Case (1914-5) 7 W. W. R. 562. Formal notice of allotment is not necessary to make the subscriber liable if it appears that he knew that -•10 DOMINION COMPANIES ACT. Sect. 46. lljo company accopicd his application: Be Publishers' Sijndicate, llarf's Case (1902) 1 0. W. R. 508; In re Universal Banking Corporation, Gunn's Case (18G7-8) 3 Oh. App. 40; Traders Trust Co. v. Goodman (11)17) 37 n. L. 1\. 31 ; Be Winding-Up Act and Canadian Tractor, d-c, Co. (1914-5) 7 W. W. R. 562. Be Monarch Bank, Murphy's Case (1918-9) 45 0. L. R. 412, affirmed by Supreme Court of Canada, sub nom. Murphy V. Clarkson (1920) 17 0. W. N. 295. And where a sub- scriber received requests for payment of his shares although no notice of allotment had been given he was held liable, the evidence being held sufficient to prove that he had knowledge of the acceptance of his offer to buy shares: Denison v. Lesslie (1878-9) 3 A. R. 536; see especially the remarks of Moss, C. J. 0., at p. 547. See also Forget v. Cement Products Co. (1915) 24 Que. K. B. 445 ; (1916) 28 D. L. R. 717 ; Be Winding-Up Act and Canadian Tractor, Sc, Co. W. B. Hooker's Case (1914-5) 7 W. W. R. 562. Notice of a share- holders ' meeting may be sufficient notice of allotment : Traders Trust v. Goodman (1917) 37 D. L. R. 31, 33, ^^;Alherta Boiling Mills v. Christie (1919) 58 S. C. R. 208, 214. On the other hand it has been doubted whether notice of call is equivalent to notice of allot- ment: Nasmith v. Manning (1882) 5 S. 0. R. 417; Canadian Tin Plate Co., Morton's Case (1906) 12 0. L. R. 594, 600. The entering of the subscriber's name on the register of shareholders is not sufficient to take the place of formal notice of allotment: In re Universal Banking Corporation, Gunn's Case (1867-8) 3 Oh. App. 40. A notification by the secretary of the company that shares have been assigned to an applicant is not suffi- cient to make him a shareholder, when the authorization of the company or the allotment by the directors is not shown, even though the applicant's name is entered in the companv's books: Common v. Mattheivs (1899) Que. 8 Q. B.' 138. Waiver of Allotment and notice thereof may be waived by act- Esto^pei. i^S ^s a shareholder and director: Lake Superior WITHDRAWAL OF APPLICATION. 241 Navigation Co. v. Morrison (1872) 22 U. C. C. P. 217. Sect. 46. Though the applicant receive uo notice of allotment ~ he may be held to be estopped by his acts from setting- up want of notice and actual notice may be imputed to him from circumstances, such as if he acts as a director: Levita's Case (1867) 3 Ch. App. 36; Flet- cher's Case (1868) 37 L. J. Ch. 49; Bird's Case (1864) 4 D. J. & S. 200; or where he has executed a transfer of the shares: Crawley's Case (1869) 4 Ch. App. 322; or has paid one call on the shares: Morden Woollen Mills V. Uaeckels (1908) 17 Man. E. 557. Allowing one's name to remain on the register and acting as o\^^ler of shares is sufficient: Morrishurgh and Ottaiva, (&€., V. O'Connor (1915) 34 0. L. E. i61; and in Re Gramm Motor, &c., and Bennett (1915-6) 35 0. L. E. 224, it was held that Bennett by allowing his name to be put on the register to qualify as director and vice- president, voting and taking an active part in the company's affairs before shares standing in his name could be legally issued as paid up, thereby elected to take the shares ^\'ith the liability attaching to them. Neither formal subscription nor allotment was neces- sary. See also Traders Trust v. Goodman (1917) 37 D. L. E. 3], where the subscriber attended meetings and gave proxies. Unless the application is under seal it may be withdrawal withdrawn at any time before it has been accepted: Re tfon^^^'*^^" Canadian Tin Plate Dccoratinf) Co., Morton's Case (1906) 12 C). L. E. 594; Hodcjins v. O'Hara, 22 Occ. N. 29, 13.'}; He Nipissinf) Planing Mills, Rankin's Case (1909) 18 O. L. E. 80; Kniger v. TTorwood (1907) 16 Man. E. 433. Ordinarily communication by post of the allotincMi will be deemed to have been authorized and in sucli cases the contract is complete Avhere a letter has been posted accepting tlie offer: Harris' Case (1872) L. E. 7 Ch. App. 587. Wliere notice of allotment is duly posted the a|)plicaiit is ])rnnid even llioiigli (he notice never reaches him : Uousehold Fire Ins. Co. v. Grant n.c'.A. — K! -42 DOMINION COMPANIES ACT. Sect. 46. (1879) 4 Ex. D. 216; Northtvest Battery v. Hargraie ■- (1913) 15 D. L. R. 193, 205. Even after shares have been aHotted repudiation is in time if made and com- nuinicatcd to the company before notice of allotment has been posted, otherwise it is too late: Byrne y. Van Tienhoven (1880) 5 C. P. D. 344; Harris' Case (1872) L. R. 7 Ch. App. 587; Stevenson v. McLean (1880) 5 Q. B. D. 346; Northwest Battery v.^Hargrave (191,')) 15 D. L. R. 193. Repudiation is effective from the time when it reaches the company: Ilenthorn v. Fraser (1892) 2 Ch. 27. Notice of mthdrawal if given to the general agent of tlie company who procured the subscription will be sufficient notice to the company: Kruger v. Hor- icood (1907) 16 Man. R. 433; and see Re Lake Ontario Navigation Co. (1910) 20 0. L. R. 191, and Re Pub- lishers' Syndicate, Mallory's Case (1902) 3 0. L. R. 552. Withdrawal of application under seal. In the case of an application under seal the Court of Appeal in Ontario has held that the offer to take shares could not be withdrawn and an attempted with- drawal before allotment was ineffectual: Nelson Coke and Gas Co. v. Pellatt (1904) 4 0. L. R. 481. In that case the document signed was in the following form : — ''We, the undersigned, do hereby severally subscribe for and agree to take the respective amounts of the capital stock of the Nelson Coke and Gas Company, Limited, and of the class thereof set opposite to our respective names as hereunder and hereinafter writ- ten, and to become shareholders in said company to the said amounts, when and as the said stock so subscribed for by us severally shall be issued and allotted to us ; and we do hereby severally covenant each with the other and others, with the said company, and the directors thereof, to accept the said stock when the same shall be allotted to us severally, and to pay for the same to the said company at par, when and as a call or calls for payment shall be made upon us severally by the directors. WITHDRAWAL OF APPLICATION. 243 *'In witness whereof we have set our hands and Sect. 46. seals this 1st day of September, 1899." ' It is not to be contended of course that a person who has subscribed under -seal for shares is irrevoc-" ably bound to take them. He can not however success- fully repudiate his subscription unless he can prove a case for rescission of the contract by the court : Modern Bedstead v. Tohin (1908) 12 0. W. E. 22, a decision of Boyd, C. Here the subscriber had signed the memorandum of agreement and stock book. The Pellatt Case was followed in Re Provincial Grocers, Limited, Calderivood's Case (1905) 10 0. L. R. 705, although the decision really turned on another point. Here there was a subscription under seal for one share, the subscriber agreeing to pay $100 therefor as follows : 10 per cent, on application ; 25 per cent, two months thereafter and the balance as the direc- tors might deem advisable. Before any action had been taken by the company on the application, the subscriber wrote cancelling his subscription. The sub- scriber was drawn on for the 10 jjer cent, payable on application, but refused to accept the draft, and beyond entering his name in the list of shareholders the com- pany thereafter did not treat him as a shareholder. Jt was held on these facts that the offer could not be withdrawn by the subscriber before acceptance, but that the company never intended to accept the sub- scriber as a shareholder unless ten per cent, was paid on application. It was further stated that even if the company had accepted the application there was a duty to communicate the accei)tance to the sii))scriber, in tiic absence of which he could not be made liable as a shareliolder. Nelson Coke and Cias Co. v. Pelhill ai)])ears to be in con flirt witli llic cai'lier case of Nasiiillli v. Maiininq { 18«0) 5 A. ]^ ]2(;, (1880) 5 S. C. R. 417, where the sub- scription was under seal and in substantially the same form as in the Pellatt Case. The d(^IVndaiit without having purported to withdraw^ his subscription relied on absence of notice of allotment. It was held that the 244 DOMINION COMPANIES ACT. Sect. 46. subscription, altlioiii^h uiuler seal, was an offer merely wiiicli retiuircd acceptance ])y the company and which coukl be willulrawn at any time before allotment. Ac- cordini>,ly there was a duty'u[)on the provisional direc- tors to allot and give notice of aHotment of the stock in a reasonable time, and this not having been done, the defendant was not liable as a shareholder. In the Province of Manitoba it has been held that the fact of an application for shares in a com])any being under seal does not dispense with the necessity of a company accepting the offer and communicating its acceptance to the .applicant to make a complete contract: North-ivest Battery v. Hargrave (1913) 23 ]\Ian. L. R. 923, 15 D. L. R. 193. Repudiation of subscription after allotment. Defences. Even wliere an application has been duly made and accepted by the company and shares allotted, the applicant may be entitled to raise various defences to a claim by the company to hold him to his subscription ; thus for example he may object (1) That his subscription was obtained by fraud or misrepresentation. (2) That his application was subject to a condi- tion which has not been performed. (3) That the company is not the company in which lie intended to apply for shares. (4) That the company has no shares w^hich it can properly allot, or that it has allotted shares other than those su])scribed for. (5) That there has been total failure of consid- eration. (()) That he is an infant. 1. Fraud or misrepresentation. This defence has been already dealt with under s. 43 in so far as it arises out of misrepresentations contained in a prospectus, and the reader is referred to the notes to that section in which the cases are collected where this defence has been raised in the absence of or independently of a prospectus. REPUDIATION OF SUBSCRIPTIOX. 245 Subscriptions of stock obtained by surprise, fraud Sect. 46. and false statements of tlie affairs of the company made by its officers and directors are null and produce no obligation, and the shareholders, thus deceived, may even recover what they have paid on their shares: The Glen Brick Company v. Shackwell (1870) 1 R. C. 121. AVliere the directors, finding that subscriptions have been obtained by improper representations, offer to cancel the certificates issued and return the money received, and such offer is accepted by the subscriber, the latter becomes a creditor of the company for the amount he had paid : Re Civil Service Club, Furness, Withu S Co., Ltd.'s Claim (1917-8) 13 0. W. N. 138. See also Provincial Insurance Co. v. Brown (1860) 9 U. C. C. P. 286. The matter is further discussed in the notes to s. 43. 2. Conditional subscription. An offer to take shares like any other offer may be absolute or conditional; in the latter case the condi- tion may be a condition precedent or subsequent, or tliere may be a collateral agreement annexed to the application. If there is a condition precedent some- thing is required to be done or some pre-requisite complied with before the contract becomes complete and the subscriber becomes a shareholder. In ilie case of a condition subsequent or of a collateral agreement, on the otiior liand, the intention is that the subscriber is to become a shareholder in praesenti. Whetlier any arrangement entered into with regard to a subscription for shares is a condition precedent or a condition subsequent or a collateral agreement appears in every case to be a ({uestion of \':\ci. If there is an undertaking that something is to Iti' done in the future there may be a ])resnnii)1ioji against a condi- tion precedent being intended: Elkington's Case (1867) 2 Ch. App. 511, 524. Examples of conditions precedent mav be found Condition in the following cases: Canadian Ohio Motor Co. y. ^""^^^ ^° • !4i; DOMINION COMPANIES ACT. Sect. 46. Cochnnw (1914-5) 7 O. W. N. 698, affirmed (1915) 8 0. W. N. 242, where there was a requirement that a definite amount should be subscribed for before the api)licant became bound. In Re Standard Fire Insurance Co., Turner's Case (1885) 7 0. R. 448, T. gave a power of attorney to C. to subscribe for shares only to be used if T. became a director. C. directed an officer. of the company to enter T.'s name on the list of shareholders which was done, but T. was never made a director. On receipt of a notice of call on his shares T. at once repudiated his liability and it was held that he had not become a shareholder. See also Re Great Northern Assurance Co., Black's Case (1915) 25 D. L. R. 703, 25 Man. R. G70; Monarch Life v. Brophy (1907) 14 0. L. R. 1; Mallory's Case (1902) 3 0. L.R. 552; Edge v. Security Life Ins. Co. (1912) 8 D. L. R. 492. Condition 111 the followiiig cascs it was held that there was orSa^Sai "^^ly ^ Condition subsequent or a collateral agreement : agreement Cttston's Casc (1885) 7 0. R. 448; 12 A. R. 486'; (1886) 12 S. C. R. 644, where the defendant subscribed for shares on the understanding that he was to be solicitor for the company, that he was to pay no cash for his shares but that his remuneration as solicitor was to be credited on them. Re Wiarton Beet Root Sugar Co., Jarvis's Case (1905) 5 0. W. R. 542, where the arrangement that the subscriber should pay for his shares in goods to be supplied w^as held to be a collateral agreement. See also Elkington's Case (1867) 2 Ch. App. 511; Sher- rington's Case (1885-6) 31 Ch. D. 120; Bridger's Case (1870) 5 Ch. App. 305; Alberta Rolling Mills Co. v. Christie (1919) 58 S. C. R. 208; Hamilton v. Stewiache (1897) 30 N. S. R. 166; Barret v. Bank of Vancouver (1917) 36 D. L. R. 158; Re Monarch Bank of Canada, Murphy's Case (1918-9) 45 0. L. R. 412, affirmed by Supreme Court of Canada sub nom. Murphy v. Clark- son (1920) 17 0. W. N. 295 (agreement to appoint sub- scriber a director). CONDITIONAL SUBSCRIPTION. 247 Notwitlistanding a condition subsequent ^dlich is Sect. 46. unfulfilled a subscriber may become a de facto s]iare- holder where he has retained the shares and given })roxies to vote thereon: Alberta Rolling Mills v. Christie, supra. The company is not entitled to allot shares in Non-compU- disregard of a condition imposed by the applicant : eondmon Ottawa Dairy Company v. Sorley (1906) 34 S. C. R. 508. If a subscription is subject to a condition pre- cedent the subscriber does not become a shareholder unless the condition is fulfilled: Re Great Northern Assurance Co. (1915) 25 D. L. R. 703, 25 ;\lan. L. R. 670. In the case of a condition subse(]ueiit, on the other hand, the subscriber may be entitled to a ri^ht of action for indemnity or damages against tlie com- pany, but be cannot repudiate his liability as a share- holder: Clarke v. Union Fire Insurance Co., Caston's Case (1884) 10 P. R. 339. If tlie company is still a going concern, so that the rights of creditors do not arise, a person who has subscribed for shares on an express condition, e.g., that business would be com- menced and the subscriber would receive a definite appointment, is entitled to rescission of the agree- ment, and the return of his money if the condition is not fulfilled: International Casualty Co. v. Thompson (1913) 11 D. L. R. 634. See also Re Winding-Up Act and Canarlian Tractor, Sc, Co., W. B. Hooker's Case (1914-5) 7 W. W. R. 562. The right to rescind is however lost if a winding-up lias intervened: Re Stan- dard Fire Insurance Co., Caston's Case (1886) 12 S. C. R. 644; Fisher's Case (1885-6) 31 Ch. D. 120, 128; Brownlee v. Hyde (1906) Que. 15 K. B. 221; Barrett V. Bank of Vancouver (1917) 36 D. L. R. 158. A stipulation in a subscription that the amount unpaid is to be satisfied by the application of dividends will not avail against a licpiidator: Re Investors, Ball's Case (1918) 3 W. W. R. 180. A condition subsequent or collateral agreemcnit ])y which under certain circumstances a subscril)er is entitled to surrender the sliares and demand Ihe return 248 DOMINION COMPANIES ACT. Sect. 46. ol' liis inoiioy is idfra vires as involviiio- an illog-al rodnction of tlio company's capital: Albciia HoUiuq }liUs V. Clinslie (1919) 45 1). L. R. 545; 58 S. C. R. 208. Tliat case was one decided in relation to a company gov- erned by the Alberta Companies Ordinance, which con- tains strict ])rovisions as to the conditions on which and the methods by which the company's capital may be reduced. And while Middleton, J., in Re Port Arthur War/on Co., Tudhope's Case (1919) 45 0. L. R. 260, sngg-ests that an agreement to surrender by a Dominion company may not be ultra vires, it may be observed that provisions similar to those of the Alberta Companies Ordinance, above referred to, were in 1917 incorporated in the Dominion Act. See s. 54. Evidence of A condition precedent need not appear in the existence of t i- • i lo ^ i, , ,,.,. J. condition, application itself. 1\\ Mofiarch Life \. Bropliy (1907) agr?emi,'r^ \-^ ^- ^- ^- ^^ whcre the defendant signed a printed form of application and it was admitted that this did not represent the whole agreement, the Court went into the evidence which established a condition pre- cedent. See also Re Canadian McVicar Engine Co. (1909) 13 0. W. R. 916; In re Publisher's Syndicate, Mallory's Case (1902) 3 0. L. R. 552; Re Globe Fire Assurance Co., Robertson's Case (1909) 11 W. L. R. 45, 293; 2 Sask. R. 266; In re Victor Wood Works (1908-9) 43 N. S. R. 368; The Silliker Car Co. v. Evans, 11909) 7 E. L. R. 560; Carter v. C. N. R. (1911) 32 O. L. R. 140; Ontario Ladies College v. Kendry (1906) 10 0. L. R. 324. In the last mentioned case the com- pany's agent who had obtained the subscription having died before the commencement of the action the uncor- roborated evidence of the subscriber that the written agreement was made subject to a contemporaneous oral agreement was accepted in the absence of facts indicating the contrarv. Where the written subscription states that it is made unconditionally oral testimony will not be admit- ted to establish the contrary: St. Rock Hotel Co. v. Barbeau (1915) 48 Que. S. C. 94. condition. COXDITIOXAL SLTBSCRIPTIOX. ' 249 Xor where a winding-up has intervened will evi- Sect. 46. dence of a condition subsequent be admitted whereby ^ creditors would be prejudiced: Hamilton v. Holmes (:i 900-1) 33 N. S. R. 100, footnote. See also Gaston's Case (1886) 12 S. C. R. 644, 647; Brownlee v. Hyde (1906) 15 Que.K. B. 221. The subscriber should prove that the condition sought to be annexed to the subscription has been brought to the notice of the company: Harrison's Case (1868) 3 Ch. App. 633, 638; In Re 'Publishers' Syndi- cate, Mallorifs Case (1902) 3 0. L. R. 552. A collateral agreement may be bad because made by a person, e.g., a provisional director, who is not entitled to bind the company thereby : Wilson v. Ginty (1878-9) 3 A. R. 124, 129. If the subscriber does not repudiate his subscrip- Waiyerof lion after notice of allotment before the condition has been complied with he will be liable as a shareholder: Wheatcroft's Case (1873) 29 L. T. 324. A condition may be waived by conduct, e.g., if the subscriber attends meetings, acts as director, executes transfers of his shares, makes payments thereon or does other acts which show that he has assumed the position of shareholder. See Kingston Street Rail- ivay y. Foster (1886) 44 U. C. R. 552; Wiarton Beet Root SiKjar Mfg. Co., Alexander McNeill's Case (1905) 10 O. L. R. 219; Rankin v. Hop & Malt Ex- change, Sc, Co. (1869) 20 L. T. 207; Perrett's Case (1873) 15 Eq. 250; Re Lake Ontario Navigation Co., Davis's Case (1910) 20 O. L. R. 191. See also Bank of Hamilton v. Johnston (1906) 7 0. W. R. Ill; In re Victor Wood Works, Ltd. (1908-9) 43 N. S. R. 368; Barret! v. Pnink of Vanconrer (1917) ."Ul D. L. R. 158, 160. There must be full knowledge to achnit of \v;iivor; and there can be no waiver where the acts of tlic subsci'iber wliich are relied on .-nc ddiic in llie belief that the condition has been ruHillcd: Canadian Ohio Motor Co. V. Cochrane (1914-5) 7 O. W. N. 698, affirm. ■(! (1915) 8 O. W. X. 242. 250 DOMINION COMPANIES ACT. 3. That the company is other than the one in which shares were applied for. Sect. 46. Where a person applies for shares in a company believing it to be a totally different company there is no contract and the subscriber is entitled to repu- diate : Baillie's Case (1898) 1 Ch. 110. As no contract has been entered into the subscriber will be entitled lo liave his name removed from the list of contribu- tories even though he takes no steps in that direction prior to the winding up. Where payments had been made under a mistake of fact, the subscribers thinking they were paying, as they had subscribed, to a different company, it was held that they were not bound: In re Victor Wood Works (1908-9) 43 N. S. E. 368. See also Re Port Arthur Wagon Co., SmytWs Case (1919) 57 S. C. R. 388. 4. No shares created which can properly be allotted. In Manes Tailoring Co. v. Willson (1907) 14 0. L. R. 89, it was held that there being no shares of the kind specified which could have been allotted to the defen- dant, there had been a total failure of consideration for a note given by the defendant in payment and he was not liable thereon. If preferred shares are applied for and the shares allotted are common shares, in the absence of conduct which would estop the subscriber from claiming that the company was in a position to give him preference shares he can set this defence up against a liquidator seeking to make him a contri- butory: Re Banker's Trust Co. & Barnsley (1915) 21 D. L.'r. 623, 21 B. C. R. 130; Banker's Trust v. OkeU (1916) 27 D. L. R. 68; J^e Pakenham Pork Packing Co. (1905) 12 0. L. R. 100. So also as regards shares purporting to have been created on an increase of capital illegally effected: In Re Ontario Express and Transportation Co. (1894) 21 A. R. 646. See also Union Bank v. Gourlay (1916) 31 D. L. R. 565; (1917) 35 W. L. R. 935 on estoppel of subscriber. EEPUDIATION OF SUBSCRIPTION. 251 5. Total failure of consideration. If shares have been subscribed for on the basis Sect. 46. of an arrangement which subsequently becomes imprac- ti cable and is abandoned so that the whole consider- ation for the subscription is gone, the subscriber is entitled to be relieved and recover back anything he may have paid on the shares : The Bullion Mining Co. V. Cartwriglit (1905) 10 0. L. R. 438, but not where the shareholder was one of the original incorporators : Gifjuere v. Colas (1915) 48 Que. S. C. 198. So also where the shares were not and could not have been delivered: Sovereign Bank v. Mclntyre (1909-10) 1 O. W. N. 254. 6. Infancy. The contract of an infant to take shares, like other voidable contracts of an infant, is valid until repudia- tion, which in order to be effective must take place within a reasonable time after the attainment of majority. Laches or acquiescence or an affirmation of the position of shareholder after majority will leave the former infant liable as a contributory in a wind- ing-up: Re Sovereign Bank of Canada, Clark's Case (1915-16) 35 0. L. R. 448; Re Prudential Life Insur- ance Co.; Re Paterson (1918) 1 W. W. R. 105 (receipt of a dividend). If an infant is a shareholder when winding-up com- mences, or if he is not then precluded from repudiating his shares, he does not lose that right by mere delay: He Central Bank and Hogg (1890) 19 0. R. 7. Where shares have been transferred to an infant by way of gift, and lie effectually repudiates the shares, tlioy re-vest in the donor: Re Sovereign Bank of Canada, Barnes's Case (1916-7) 11 0. W. N. 103. Preference Shares. 47. The directors of tlie company may make by-laws for Preference nreatiii^f and issuing any part of the capital stock as preference stock, stock, giving the sanio snch preference and prifiriiy, fis respects dividends and in any other respect, over ordinary stock as is by such by-laws declared. --")- DOMINION COMPANIES ACT. Sect. 47. 2. Sui'li by-laws may provide that the holders of shares of ,^7-^7;: such preference stock shall liave the right to select a certain as\o c\)iitrol stated proportion of the Board of Directors, or may give them of affairs. sucli other control over the ali'airs of the company as is considered expedient. 2 E. VII., c. 15, s. 38. By-law to be 48. No snch by-law shall have any force or effect whatever sauctioned. until after it has been sanctioned by a vote of three-fourths of the shareholders, present in person' or by proxy at a general meeting of the, company duly called for considering the same and representing two-thirds of the stock of the company, or until the same shall be unanimously sanctioned in writing by the shareholders of the company. 2 E. VII., c. 15, s. 38. Rights aud 49. Holders of shares of such preference stock shall be f'VV'/.*'^!^^^ shareholders within the meaning of this Part, and shall in all preference respects possess the rights and he subject to the lial)ilities of stock. shareholders within the meaning of this Part : Provided that in respect of dividends, and in any other respect declared by by-law as authorized by this Part, they shall, as against the ordinary shareholders, be entitled to the preferences and rights given by such by-law. 2 E. VII., c. 15, s. 38. Procedure. 1. Where preference shares are created by by-law. 2. Where preference shares are created by letters patent. Note on preference shares. (a) Preference as to dividends. 1. Payment out of capital. 2. Cumulative dividend. 3. Participating. (b) Preference as to return of capital or distri- bution of surplus in a winding-up. (c) Rights as to control or interference in the management of the company's affairs. (d) Exchange of preference shares for shares of a different class — Redemption. Tho Imperial Act contains no clause dealing specifically in terms with this power, and the whole scope of the act in that regard is so different from the Canadian acts that the English decisions must be applied with great caution. PREFERENCE SHARES. 253 Compare Imperial Act, 1862, ss. 8 and 50, and Sees. 47-49. Companies (Consolidation) Act, 1908, ss. 3 and 13, and ~~ the following cases : Harrison v. Mexican Rail. Company (1875) L. R. 19 Eq. 358; Ashhury v. Watson (1885) 30 Cli. D. 376; Andrews v. Gas Meter Co. (1897) 1 Ch. 361; Be J as. Cohner, Limited (1897) 1 Ch. 524. The powers, rights and privileges of the holders of preference shares may be very widely varied so that on the one hand they approach towards the rights of delx'nture holders and on the other hand may be little different from the rights of ordinary share- holders. Procedure. 1. Where preference shares are created by by-law. A by-law must first be passed by the directors creating the preference shares. The by-law should state a specified number of shares to be issued as preference shares and should make certain not only the amount of preference shares but also the amount of common shares: Manes Tailoring Co. v. Willson (1907) 14 0. L. R. 89. See the same case also as to the distinc- tion between by-laws and resolutions. A meeting of shareholders must then be called for the purpose of ratifying the by-law, or the by-law may be unanimously sanctioned in writing by all the sliai-eholders under s. 48. If the latter plan is adopted the ])y-law as it appears in the directors' minute book should be signed by all the shareholders under an endorsement stating the fact of its sanction and the date thereof. Section 48 of the Act does not expressly authorize the modification by the shareholders of llic l)y-l;i\v and its adoption as revised. However, it is submitted that this may be done, mid accordingly it is advisable that the notice calling the meeting of shareholders should make ])roper ])rovisi()n for this purpose. ir the bydaw is I'atified by resolntion at a sliai'e- holders' meeting, in oider to comply with the Act 254 DOMINION COMPANIES ACT. Secs.47-49.it is necessary (a) that two-thirds of llic stock of the company should be represented. JSection 48 does not state whether nominal capital stock or issued capital stock is intended, l^ut it is sub- mitted that the latter is the case and this view cor- responds witJi the prevailing practice of confirming the preference stock by-law during the organization stage of the company when only the incorporators' shares have as yet been issued; (b) That three-fourths of the voting power represented at the meeting should be exercised in favor of the by-law. In view of the somewhat loose wording of s. 48 it is advisable that a ballot should be taken and the actual number of votes, including those cast by shareholders holding proxies for absentees, duly recorded. The minutes of the meet- ing should, of course, also show the number of shares held by each shareholder present and the number of shares in respect of which proxies are held, the person by whom the proxies are held and the name of the shareholder giving the proxies. It is essential that the formalities prescribed by the Act should be rigidly complied with. Thus in a case decided under the analogous provisions of s. 22 R.S.O. c. 191, wiiere the shareholders of a company passed a resolution in favor of the creation of preference stock with a direction to the directors to pass a by-law, which the directors failed to do, it was held that no preference stock had been validly created : Re Paken- ham Pork Packing Co. (1905) 12 0. L. R. 100. See especially the judgment of Moss, C.J.O., at p. 109. See also Re Bankers' Trust Co. and Barnsley (1915) 21 D. L. R. 623. In Manes Tailoring Co. v. Willson (1907) 14 0.L.R. 89, the action of the directors in creating the preferred stock was in form of a resolution which was confirmed by the shareholders. Magee, J., held that the corres- ponding provision of the Ontario Companies Act, R S. 0. (1897) c. 191, s. 22 required a by-law to be passed first by the directors and then confirmed by the share- holders, thus prescribing consideration twice, and by two different bodies, acting in different capacities. Set PREFERENCE SHARES. 255 further Bartletl v. tlarUett Mines Limited (1911) 24 Sees. 47-49. 0. L. R. 419, and cases there cited. 2. Where preference shares are created by letters patent. In this connection section 8 of the Act should be referred to, which is as follows : — "8. The application shall be in accordance with form A. in the schedule to this Act and may ask to have embodied in the letters patent then applied for, any provision which could under this part be contained in any by-law of tlie company or of the directors approved by a vote of shareholders, which provision so embodied shall not, unless power is given therefor in the letters patent, be subject to repeal or alteration by any by-law. 2 E. VII. c. 15, s. 7." The above section in effect provides a second method of creating preference shares, i.e., instead of passing a by-law sanctioned by the shareholders con- formably to ss. 47 and 48, the letters patent themselves may create the preference shares and provide for the amount thereof and the terms on which they are to be issued, and the respective rights of the holders of preference and common shares. If the rights of the shareholders are fixed by the letters patent they can- not subse(iuently be modified by by-law unless the letters patent themselves provide for such modification as stated in section 8. As to preference shares of a company subject to s. 7B, see that section. If the kjtters patent so provide the advantage arising from fixing the rights of preference share- holders by defining them in the letters patent dis- appears, and, accordingly, where provision is desired to be made for altering the rights of preference share- holders, e.f)., througli i;iisiiig fresh capital by llie issue of new preference sliarcs having a spc^cial priority over the first issue, it will be found convenient to create the issue bv bv-law uiidci- ilie provisions of ss. 47 and 48. -56 DOMINION COMPANIES ACT. Prospectus. Sees. 47-49. If it is proposed to issiio a prospectus this docu- ment should state the respective amounts of common and preference shares and set out succinctly the provi- sions relating to the latter. Share cer- Wlicrc a compauv issucs shares of more than one tifioates. class it is desirable that the connnon share certificates should show both the amount of authorized common and preference share cai)ital and the par value of the shares into which each class is divided. The pre- ference share certificates should in addition state on their face the rate of dividend, the fact whether it is cumulative, participating, &c., and the restrictions, if any, imposed on the holders of preference shares. If the restrictions are lengthy they may be referred to on the face of and set out on the reverse side of the certificate. Note on preference shares. It is common knowledge that preferred stock is not the same as common stock in dividends, in distribu- tion of assets and perhaps as to voting. See lie Queen City Refining Co. (1885) 10 0. R. 264, as explained in In re London Speaker (1889) 16 A. R. 508, per Britton, J., in Port Arthur Wagon Co. (1916) 9 0. W. N. 383. The preference or priority conferred on the holders of preference shares may include one or more of the following : (a) Preference as to dividends, and the right to receive a bonus or participate in dividends after a specified dividend has been paid on connnon shares. (b) Preference as to return of capital in a winding uj) and distribution of surplus assets. (c) Rights as to the control of or interference in the management of the company's affairs. (d) The right to exchange preference shares for common shares of an equal amount. These are the more ordinary incidents of prefer- ence shares, but do not exhaust the preferences or pri- orities that may be granted. The question has not arisen for determination as to whether these sections permit the issue of shares preferred in certain resjjects but deferred in others, PREFERENCE SHARES. 257 that is conferring on the hoklers rights less than the Sees. 47-49. ordinary rights of sliareholders. For example, issuing shares preferred as to dividends but withholding all power to vote at the election of directors unless theiv shares are in default. It is submitted, however, in view of the provi- sions of s. 49 which state that the holders of preference shares shall in all respects possess the right of share- holders, that possiblj' the right to vote can not be taken away altogether, and that it is doubtful whether the ordinary voting right which every shareholder pos- sesses can be cut down in the case of a preference shareholder. See infra, p. 260. It is ultra vires to provide that the company shall at the option of the holders of preference stock accept a surrender of the shares and repay the amount thereof: Long v. Guelph Lumber Co. (1880) 31 U. C. C. P. 129. The preference conferred by the Act is over ordinary shares and not as against creditors. Such a priority is the privilege of a mortgagee or debenture l)()lder, not a shareholder as such; see In re Tonquoy Gold Mining Co. (1906) 1 E. L. R. 142. (a) Preference as to dividends. 1. Payment out of capital. A company cannot contract to pay interest of divi- dends on its shares regardless of whether there are profits availal)le: Long v. Guelph Lumber Co. (1880) 31 U. C. C. P. 129; /ie Sharpe (1892) 1 Ch. 154; see also Dent V. London Tramtvays (1880) \(S Ch. D. 344. But wlicre the i)reference clause stated " the company guarantees 8 per cent, yearly to the extent of the [^reference stock," i1 was lield that the proper con- structic)!! of tliis chiuse was not that interest was to be paid in any event and so payable out of capital, l)ut only ir lliere were profits out of wliich it could be |)aid and accordingly tlie clause was held intra, vires: Long V. G neigh Lnwber Co., supra. Under the Imperial Act it has l)een held tliat, wlicrc c(»nv('i-tibl(' debcjilui-c stock lias been issued, tiie inter- II.C.A.- 17 lloS DOMINION COMPANIES ACT. Sees. 47-49. ost lliorooii may be made chargeable to capital account " dnriiig the construction of the company's works, being treated as part of the cost of construction: Hinds v. Buenos Ayres Grand National Tramivays (1906) 2 Ch. 654, and under s. 69 (c) of the Act debenture stock can be created, which is a form of loan capital and not at all in the nature of preference shares. 2. Cumulative dividend. The dividend may be made cumulative, so that, if there are no profits available in any particluar year out of which to pay the dividend on the preference shares, such dividend is carried forward and becomes together with subsequent dividends a charge on the first profits of the company available for distribution. And a preferential dividend, in the absence of words limiting the preference, is prima facie cumulative and means a dividend having preference over the whole income of the company during the whole period of its existence or during as many years as may be necessary to satisfy the claim of dividend; per Lord McLaren in Miln v. Arizona Copper (1899) 36 Sc. L. R. 741. See also Crockett v. Academy of Music (1902) 22 Occ. Notes 201. If, on the other hand, the preference shareholders are declared to be entitled to be paid their dividend out of the net profits of each year, the dividend is not cumulative : Staples v. Eastman Photo- graphic Materials (1896) 2 Ch. 303, C. A. 3. Participating. If it is desired to confer on preferred shareholders the right to participate further in the profits of the company after payment of the fixed preferential divi- dend it must be so distinctly stated ; otherwise the right is impliedly negatived : Will v. United Lanket Planta- tion Company (1912) 2 Ch. 571. See also Re National Telephone Co. Ltd. (1914) 1 Ch. 755. (b) Preference as to return of capital or distribution of surplus in a winding-up. A preference as to dividend does not carry with it a similar preference as to return of capital or distri- PEEFEEEXCE SHARES. 259 biition of surplus in a winding-up : In re London India Sees. 47-49. Ruhher Co. (1867-8) 5 Eq. 519. The general rule, which it requires an express provision to exclude, is that both classes of shareholders rank pro rata: Morrow v. Peterborough Water Co. (1901) 4 0. L. R. 324 at p. 329. Where it is desired to confer such a right, apt words must be inserted in the by-law or the letters patent creating the issue. If the right to a priority in return of capital exists, the preference shareholders, in the absence of any provision to the contrary, are also entitled to participate rateably with the other shareholders in the distribution of any sur- plus assets that may be available for such purpose: In re Espuela Land and Cattle Co. (1909) 2 Ch. 187. Where the dividend is cumulative, and it is pro- vided that the surplus assets in the event of a winding up are to be applied, first in repaying the preference capital, and secondly, in paying off arrears (if any) of the preferential dividend to the commencement of the winding-up, the preference shareholders are entitled to payment of arrears of dividend out of surplus assets, even though no dividends have been actually declared: hi re Neiv Chinese Antimony Co. (1916) 85 L. J. Ch. 429. Semble, it is immaterial whether there were profits or not, ibid.; and see W. J. Hall (& Co. (1909) 1 Ch. 521. (c) Rights as to the control of or interference in the management of the company's affairs. The preference by-law may give the preference shareholders "the right to select a certain stated pro- [)()rtion of the board of directors" or such other control over tlic affairs of the company as is considered expedient" (s. 47). Tlic provision enabling tlie preference share- holders to elect a stated numbei- of directors is frequently taken advantage of, especially by the inser- tion of a clause in the by-law to the effect that the right shall become exerciseable on default in payment of file pi-efereTiee dividend. The tr^'nern! JMile is that 2(50 DOMINION (n)MPANlKS AC T. Sees. 47-49. raoli shareholdor is entitled to one vote for every ^llare held by liini (sec. SS (b)) but this rule may l)e excliuhHl or modified b\ the by-laws (s. 88.) In the absence of a ])rovision in the British Cohimbia Com- panies Act of 1890, similar to sec. 88, it was held that a clause in the memorandum of association purporting to enable the holders of a specified block of shares to elect three out of five directors was null and void, the shares being held not to be preference shares within the meaning of the statute : Colonist Printing and PiibJlsiruu/ Co. V. Dunsmuir (1902) 32 S. C. R. 679. Whether, conversely, the preference by-law may cut down the ordinary voting rights of shareholders is not free from doubt. Section 49 on the one hand provides that holders of preference shares shall enjoy the rights of shareholders, and section 88 on the other hand indicates that such rights may be modified by by-law. In the absence of authority it is submitted that the preference by-law creating the issue or the by-laws in existence at the time of the issue, provided the restrictions are brought to the notice of the prefer- ence shareholders at the time of subscription, may limit their voting power either as to the quantum or subject matter. If, however, it were sought subse- quently to limit such voting power by by-law passed Avith the help of a majority of the holders of common shares, there is little doubt that the Courts would at the instance of preference shareholders, whose rights were thus infringed, afford relief. (d) Exchange of preference shares for shares of a dif- ferent class — Redemption. Bonds are frequently issued on the basis that bond- holders at their option may exchange their bonds for fully paid shares, and it may similarly be desirable to confer on preference shareholders the right to exchange their shares for common shares of the like amount. As, however, shares once issued cannot be cancelled it is difficult to see how any authorization for such an exchange can be found in the act. There PREFEREXCE SHARES. 261 is this further difficulty that such cancellation would Sees. 47-49. have the effect of reducing the capital of the com- pany. Thus, if there is an authorized share capital of $300,000 divided into 1000 preference and 2000 com- mon shares, the etfect of permitting a preference shareholder to exchange his shares for common shares would be to reduce the nominal capital of the company pro tanto. This requires the authority of supplemen- tary letters patent (ss. 54-56). Doubtless the same applies to the exercise of an option to redeem prefer- ence shares contained in the by-law authorizing the issue. 50. The company shall not be bound to see to the execution Execution of any trust, whether express, implied or constructive,^ in respect of trusts, of any share. 2. The receipt of the shareholder in whose name the same Receipt of stands in the books of the company shall be a valid and binding shareholder discharge to the company for any dividend or money payable in charged respect of such share whether notice of sucli trust has been given to the company or not. 3. The companv sliall not be bound to see to the appUcation Applioation of the money paid upon such receipt. 2 E. VTT.. c. 15, s. 39. of money. The operation of such a provision as the above has not yet been fully determined. It does not prevent a person equitably interested in shares from procuring the intervention of the court to protect his rights: Binneij v. Ince Hall Coal Co. (1886) 35 L. J. Ch. 363; Taijlor V. Midland By Co. (1866) 8 W. R. 401. Tlio rule apart from statute is that a company is bound to protect tlie rights of a benelicial owner of shares wliich stand in its books in the name of a trus- tee or where it lias notice that the shares are held in trust. 'V\u' section alters the law as. regards trusts of which the company li;is notice; if Hie company has no notice oi" tlie trnst it is of course not bonnd and does not refpiire the protection of tlie section. The existing Imperial Act, s. 27, and the corrspond- ing section of the Companies Act of 1862, viz., s. 30, contain a somewhat different provision as follows: "No notice of any trust, express, ini])lied or con- -Oil DOMINION COMPANIES ACT. Sect. 50. struetivi', shall be entered upon the register, or receivable by tlie registrar, etc.," but in so far as the cases decided under these sections deal with the lia- bility of the company to see to the execution of trusts they would appear to be applicable. The section is a shield, not a sword, and where shares are held by a shareholder in trust the company is not entitled to accept a mortgage to it of the shares by the trustee in derogation of the rights of the cestui que trust: Birkheck Loan Co. v. Johnston (1902) 3 0. L. E. 497. As Street, J., said in that case at p. 507, dealing with the corresponding section, 53 of R. S. 0. 1897, the Act '' relieves the company from the duty of seeing to the execution of any trust, to which any shares are subject and enables it to pay money to a shareholder who holds shares upon any trust without seeing that the money is properly dealt with by the shareholder after receiving it, but it goes no further. Tt does not entitle the company to lend money to A. with express notice that he is mere trustee for B." The judgment was varied on appeal to the Court of Appeal (1903) 6 0. L. R. 258, but the Court did not dissent from the above statement of the law by Street, J. It is perhaps not altogether free from doubt whether the directors of the company will be person- ally liable if they allow a transfer to be registered in contravention of equitable rights of which they have actual notice. In Societe Generate de Paris v. Tram- ivays Union Company (1884) 14 Q. B. D. 424, a case decided on the provisions of section 30 of The Imperial Companies Act (1862), Cotton, L.J., and Lindley, L. J., in the Court of Appeal, thought that directors might be liable ; Brett, M.R., was doubtful. The point was not dealt with by the House of Lords where the decision of the Court of Appeal was affirmed suh. nom. Societe Generate v. Walker, 1 App. Cas. 20. The question of the applicability of the section has arisen in connection with the registration of executors or other persons at their request in the case of a death EXECUTION OF TRUSTS. 263 of a shareholder. Thus, it has been held under the Sect. 50. corresponding section of the Bank Act then in force, ~ R. S. C. (1886) c. 120, s. 29, that, as on the death of trlie ■ shareholder the title to the shares vests in his personal representatives, the bank could not refuse to register a transfer to a purchaser by an executor though the will of the testator specifically bequeathed the shares in question; nor was the assent of the legatee neces- sary: Boyd V. The Bank of Neiv Brunsivick (1891) N. B. Equity Cases 546. Similarly, where the will whereby the shares in question were bequeathed directed the substitution of the legatee's lawful issue at his death and the corporation, relying on a similar section (s. 36 of 18 Vict. (Can.) c. 202), permitted an absolute transfer, which allowed the rights of the issue to be defeated, it was held that this was permissible in the absence of actual knowledge of a breach of trust: Simpson v. Molson's Bank (1895) A. C. 270. See also the note to ss. 64 ff. on transfer of shares. A clause similar to the above section is frequently inserted in articles of association of companies incor- porated under the Imperial Companies Act or similar acts, and is know^n as the '' Exemption Clause." Its object is to relieve the company from the necessity of taking notice of equitable interests in shares and to preclude persons claiming under equitable titles from converting the company into a trustee for them. Where the articles of association contained an exemption clause it was held that the company's lien upon shares for all claims against the holder was available against a shareholder who was merely a trustee for others for debts due from him personally: New London S Brazilian Bank v. BrocMehank (1882) 21 Ch. D. 302, see also Be Perkins (1890) 24 Q. B. D. 613. As regards the position of a transferee of a holder of shares " in trust " he is bound to enquire whether the transfer is authorized })y tlie nature of the trust: Sweeney v. Bank of Montreal (1887) 12 A. C. 617 affirming (1885) 12 S. C. R. 661; sec also Raphael v. McFarlane (1890) 18 S. C. R. 183. But the words 2(U IKnrTXTOX (^0:\TrANIES ACT, Sect. 50. "]\Taiia£>vr in 'I'rust," a|)])oiuled to the sig'iiature of a bank manager, import that he hekl and transferred shares in trust for his employers, the bank, and are not calculated to suggest that he stood in a fiduciary relation to some other person so as to affect a trans- feree for value with constructive notice of such rela- tionship: Loudon £• Canadian Loan, etc., Company V. Duggan (1893) A. C. 506. See also Wilson v. B. C. Refining Co. (1915) 22 D. L. R. 634, where the English cases are collected. B.v-law to coiisoliihito shares. Purchase of fractions of shares bj' company. B.v-law for siibflivision of shares. Increase o capital. f By-law to increase capital to api)roves in respect of share capital not paid up ; or, (b) Either with or without extinguishing or reducing liability on any of its shares, cancel any paid-up share capital which is lost or unrepresented by available assets; or, (c) Either witli or without extinguishing or reducing lia- bility on any of its sluires, pay oiT any paid-up share . capital which is in excess of the wants of the company; and may reduce the amount of its share capital and of its shares accordingly, (2) Xo by-law for reducing the capital stock of the com- pany shall have any force or effect whatsoever, until it is ap- proved by the votes of shareholders representing at least two- thirds in value of the subscribed stock of the company at a special general meeting of the company duly called for consider- ing tlie .same, and afterwards confirmed by supplementary letters patent. 2 E. \'II., c. 15, ss. 41 and 43 ; 7-8 Geo. V., c. 25, s. 8. 54a. On and from the confirmation by a company of a ^^'^'''^^ij|," *° by-law for reducing .share capital, or where the reduction does "o,"p;,iiy of not involve either the diminution of any liability in respect of "and unpaid share capital or the payment to any shareholder of any reduced." paid-up share capital, then on and from the presentation of the petition for supplementary letters patent confirming the reduc- tion, the company .shall add to its name, until such date as the Secretary of State of Canada may fix, the words " and reduced," as the last words in its name, and these words shall, until that date, be deemed to be part of the name of the company: Pro- vided that, where the reduction does not involve either the diminution of any liability in respect of unpaid share capital or the payment to any shareholder of any paid-up share capital, the Secretary of State of Canada may, if he thinks expedient, dispense altogether with the addition of the words "and reduced.*' 7-.S (ie<). V., c. 25, s. 8. 54i!. (1) Where the j)roposed reduction of .share ca])ital f)l).i<'<-tions involves either diminution of liability in resi)ect of unpaid sli^r® ll'I'.f'f'^'Illo"' capital or the payment to any shareholder of any paid-up .share mcntof list capital, and in any other ca.se if the Secretary of State of Can- of objordng ada so directs, every creditor of the company who at the date of ' '' tlie petition for .supphmentary letters patent to the Secretary of State of Ciimida is futitlcd to any debt or claim which, if that Sect. 54m. Order confirming reduction. Liabilltj' of members in respect of reduced shares. DOMINION COMPANIES ACT. d;itc were tlie coniniencement of the winding-up of the company, would be admissible in proof against the company, shall be entitled to object to the reduction. (2) The StH'retaiy oF State of Canada shall settle a list of creditors so entitled to object, and for that purpose shall ascer- tain, as far as possible without requiring an application from any creditor, the names of those creditors and the nature and amount of their debts or claims, and may publish notices fixing a day or days within ^fhich creditors not entered on the list are to claim to be so entered or are to be excluded from the right of objecting to the reduction. (3) Wliere a creditor entered on the list whose debt or claim is not discharged or determined does not consent to the reduction, the Secretary of State of Canada may, if he thinks fit, dispense with the consent of that creditor, on the company securing payment of his debt or claim by appropriating, as the Secretary of State of Canada may direct, the following amount, that is to say,^ (i) If the company admits the full amount of his debt or claim, or, though not admitting it, is willing to provide for it, then the full amount of the debt or claim ; (ii) If the company does not admit or is not willing to provide for the full ■ amount of the debt or claim, or if the amount is contingent or not ascertained, then an amount fixed by the Secretary of State of Canada after the like inquiry and adjudication as if the company were being wound up. 7-8 Geo. V., c. 25, s. 8. 54c. The Secretary of State of Canada, if satisfied, with respect to every creditor of the company who under this Act is entitled to object to the reduction, that either his consent to the reduction has been obtained or his debt or claim has been discharged or has determined, or has been secured, may issue supplementary letters patent confirming the reduction on such terms and conditions as he thinks fit. 7-8 Geo. V., c. 25, s. 8. 54d. (1) A shareholder of the company, past or present, .shall not be liable in respect of any share to any call or contri- bution exceeding in amount the difference (if any) between the amount paid, or (as the case may be) the reduced amount, if any, which is to be deemed to have been paid, on the share and the amount of the share as fixed by the supplementary letters patent ; Provided that if any creditor, entitled in respect of any debt or claim to object to the reduction of share capital, is by reason of his ignorance of the proceedings for reduction, or of their nature and effect with respect to his claim, not entered on the list of creditors, and, after the reduction, the company is IXCREASE OR EEDUCTIOX OF CAPITAL, ETC. 267 unable, within the meaning of the provisions of the Winding-up Sect. 54d. Act to pay the amount of his debt or claim, then, — R.S., c. 144. (i) every per.son who was a shareholder of the company at the date of the supplementary letters patent shall be liable to contribute for the payment of that debt or claim an amount not exceeding the amoimt which he would have been liable to contribute if the company had conmienced to be wound up on the day before the date of the supplementary letters patent; and, (ii) if the company is wound up, the Court, on the appli- cation of any such creditor and proof of his ignorance as aforesaid, may, if it thinks fit, settle accordingly a list of persons so liable to contribute, and make and enforce calls and orders on the contributories settled on the list as if they were ordinary contributories in a winding-up. (2) Nothing in this section shall affect the rights of the contributories among themselves. 7-8 Geo. V., c. 25, s. 8. 54e. Any director, manager, or officer of the company who Penalty for wilfully conceals the name of any creditor entitled to object to concealment the reduction, or wilfully misrepresents the nature or amount creditor, of the debt or claim of any creditor, or aids or abets in or is privy to any such concealment or misrepresentation, is guilty of an indictable offence and liable to five years' imprisonment or to a penalty not exceeding one thousand dollars, or to both such imprisonment and such penalty. 7-8 Geo. A", c. 25, s. 8. 54f. In any case of reduction of share capital the Secretary Publication of State of Canada may require the company to publish, as he of reasons directs, the reasons for reduction, or such other information in ^?^J^ ^^'' regard thereto as he may think expedient with a view to give proper information to the public, and, if he thinks fit, the causes which led to the reduction. 7-8 Geo. V., 1917, c. 25, s. 8. 55. At any time, not more than six months after the approval Supple- of a by-law for increasing or reducing the capital stock of the mf"tary Let- company, or for subdividing the shares, the directors may apply cmi by-law. to the Secretary of State for the issue of supplementary letters patent to confirm the same. 2 E. VII., c. 15, 8. 44. 56. The directors shall, with such application, produce a Evidence copy of such by-law, under the seal of tlie conipimy, and signed with by the president or vice-president, and the secretary, ami ,.stab- ■"r'P^'*^"''^^- lish to the satisfaction of the Secretary of State, the duo passage and approval of such by-law and the exjjcdiency and bona fide character of the increase or reduction of capital or subdivision of shares, as the case may be, thereby provided for. *2()8 nOMlMON COM I'ANIKS A{"r. Sect. 56. '- Tlie Si'mMnry of Suilo sliall, for lluit purpose, take any — roquiisite evidence in writing, by oath or aliiruuilion or by solemn hmv'7all-en deelaralion. and sliall keep of record any such evidence so taken. 2 E. VII., e. 15, s. 44. (Jniiitiuf: 57. Upon the due passage and approval of such by-law being of tlio letters, g^j established, the tSeeretary of State may grant such supple- mentary letters patent. Notice. 2. Notice of the granting of such letters patent shall be forthwith g\\en by the Secretary of State in tlie (Umada Gazette, in the form E in the schedule to this Act. Effect of 3. From the date of such supplementary letters patent, the letters. capital stock of the company shall be and remain increased or reduced, or the shares subdivided, as the case may be, to the amount in the manner and subject to the conditions set forth by such by-law. New stock 4. The whole of the stock, as so increased or reduced or with subject to s,uc\\ subdivided shares, shall become subject to the provisions of"tliis^"°^ of this Part, in like manner, as far as possible, as if every part part. thereof had been or formed part of the stock of the company originally subscribed. 2 E. VII., c. 15, s. 45. Increase or reduction of capital, etc. Increase of capital. Reduction of capital. Modes of reduction. Pari passu. Illegal reduction. Procedure for alteration of capital stock. Increase, decrease, or sub-division. Further requirements in case of reduction. Consolidation of shares. The general rule is that where the authorized share capital of a company has become fixed by its letters patent there is no inherent power in the company or in its shareholders or directors to alter such share capital. The Act, however, contains provisions per- mitting such alteration on compliance with the statu- tory requirements. It follows from the rule first stated that no increase, decrease or subdivision of the capital stock of a com- pany is valid unless the steps prescribed by the statute have been strictly followed. So where the INCREASE OR REDUCTION OF CAPITAL, ETC. 269 company's capital has been increased without the issue Sees. 51-57. of supplementary letters patent and the holders of the new shares have voted on a resolution at a share- holders' meeting the resolution is invalid, even though a majority of the original shareholders voted in favor of it: CourcJiene v. Viger Park Co. (1915) 23 D. L. R. 693; 24 Que. K. B. 97. Under the Dominion Act, it is a condition prece- increase dent for the increase of capital that ninety per cent. ° ^^^^ ^ ' of the authorized capital has been subscribed and fifty per cent, thereon paid in. Bona fide compliance with this requirement is essential, and an attempt to pay up the existing shares ])y declaring a discount to the amount unpaid is ineffectual: In re Ontario Express d Transportation Co. (1894) 21 A. R. 646. See also Page v. Austin (1884) 10 S.- C, R. 132, 167. The increase of capital must, moreover, be sanctioned by supplementary letters patent. While such supple- mentary letters patent when granted are not open to attack at the instance of a member of the public by reason of the irregularity in respect of any matter pre- liminary to tiieir issuance, this rule does not apply as against the Attornev-General : Myers v. Lucknotv Ele- vator Co. (1905) 6 6. W. R. 291. On an increase of capital the new shares should be offered to the existing shareholders pro rata, and a one-sided allotment by the directors to themselves of tlie new sliares so as to alter the control has been held invalid : Martin v. Gibson (1908) 15 O. L. R. 623. See also Bonisteel v. Collis Leather Co. (1919) 45 0. L. R. 1 95. The procedure to be followed by llie corn])aiiy on an aj)plicati()n for jiii increase of capital is set out below. Section 54 of R. S. C. 1906, c. 79, was repealed in Uofiuction 1917 by llie ('oiiii)anies Act Amendment Act, 7-8 V. c." *"'"" 25, and a new gron]) of sections mnnbered 54 to 54F enacted. These sections adoj)t tlie provisions of sec- tions 46 and following sections ol' the lin|)erial Com- panies (rV)nsolidation) Act, 190H, with some modifica- 270 DOMl^'lU.N COMPANIES ACT. Sees. 51-57. tioiis necessitated by reason of the different mode of incorporation in use under the Dominion Act, viz., by letters patent instead of by memorandum and articles of association, and by reason of the fact that the Secre- tary of State is substituted for the Court as the autho- rity who confirms the reduction. Modes of roJ notion. Further modes of reduction. A reduction of the capital stock of a company may take place in various ways, of which the following are examples : — 1. By cancellini? liability of shareholders in respect of unpaid capital. For example, shares having a par value of $100 each have been subscribed for and issued to shareholders ; $50 have been paid up on each share and there remains a liability of $50, which can be called up at any time by the directors. If the shares are re- duced to $50 fujly paid shares this liability is extin- guished. 2. By paying off or returning paid-up capital not required for the purposes of the company. 3. By cancelling authorized capital or unissued shares. 4. By cancelling capital which has been lost or is • unrepresented by available assets. This latter mode is the one which is adopted for the purpose of enabling a company to pay dividends after a loss or depreciation of capital. See In re Hoare, &c., Co., Ltd. (1904) 2 Ch. 208, and the note to s. 70. In view of the fact that the amendment to the Act is recent and the practice thereunder has not yet been defined it is not possible to state to what extent the decisions under the corresponding sections of the Im- perial Act will be applied, but it is submitted that the Secretary of State will be guided by the English prac- tice. The following is a short statement of the result of some of the more important cases under the sections of the Imperial Act. The section authorizes the reduction of share capital in ''any way"; and the above list of modes is not exhaustive. Any form of reduction of capital may INCREASE OR REDUCTION OF CAPITAL, ETC. 271 bo sanctioned: British American Trustee Corporation Sees. 51-57. V. Couper (1894) A. C. 399; if it is not unjust or inequitable : In re Credit Assurance, Sc, Corporation, Ltd. (1902) 2 Ch. 601; and is fair as between the various classes of shareholders: Poole v. National Bank of China (1907) A. C. 229. A scheme of reduction may be fair and equitable though it alters the rights of preference shareholders : In re Welsbach Incandes- cent Gas Light Co., Ltd. (1904) 1 Ch. 87. Where there are several classes of shares prima Pan passu facie the reduction should be pari passu : Bannatyne v. Direct Spanish Ti>legraph Co. (1887) 34 Ch. D. 287. If, however, preference shares are entitled to priority as to capital the reduction should be effected upon the other classes: In re Agricultural Hotel Co. (1891) 1 Ch. 396; In re London and New York Investfnent Cor- poration (1895) 2 Ch. 860. The rule is that, where there are different classes of shares, the loss of capital should fall on those classes which according to the constitu- tion of the company are the proper ones to bear it : In re Floating Dock Co., Ltd. (1895) 1 Ch. 691. But a reduction may be sanctioned which alters the rights of different classes of shareholders: In re Welsbach In- candescent Gas Light Co. (1904) 1 Ch. 87. In that case the company having passed a special resolution for reduction- of its capital also resolved in accordance with the provisions of the articles that, after confirmation of the special resolution by the Court, the riglits of the shareholders inter se should be altered in favor of the ordinary shareholders at the expense (if tlie preference shareholders. It was held that the Court might consider whether the scheme was fair or unfair, wiiether it did or did not accord exactly witli the legal i-ights of the sliareliolders; and the scheme, including llic alteration of the I'ights of the shareholdci's, being deemed fail' and e(|uital)le the reduction was confii-med. In British and American Trustee Corporation v. Couper (1894) A. C. 399, the company had power under its articles to reduce cai»il.il Ity paying off capital. '2r2 DOiMlMON COiAirANlKS ACT, Sees. 51-57. The coinpaiiy carried on business in lilngland and tlic United States and found this lo be disadvantag-eous, and a si)ecial resolution was passed whereby the com- j)any was to make over the American assets to the shareholders there and cancel their shares, the English shareholders taking the English assets and an agreed sum by way of adjustment. It was held that the arrangement was fair and equitable and should be con- firmed. roiluetion. For examples of cases where reduction has been refused on the ground of illegality see In re Develop- ment Company of Central and WeM Africa (1902) 1 Ch. 547; /^e Walker Steam Traivl, <&c., Co. (1908) S. C. 123 Ct. of Sess. 10 F. 123. In the former case deferred shares were proposed to be cancelled and the holders were to receive 100 £1 ordinary shares in exchange for each £1 deferred share. This scheme w^as held to be illegal as being in reality an increase of capital and the issue of part thereof at a 99 per cent, discount. In the latter case part paid shares were converted into paid- up shares and the unissued capital increased. Increase, decrease or sub- division. Procedure for alteration of capital stock. The procedure to be followed by the company is the same for applications to increase, decrease or sub- divide the share capital of the company. A by-law must first be passed by the directors and approved by the votes of shareholders representing two-thirds in value of the subscribed stock of the com- pany at a special general meeting of the company duly called for considering the by-law. The directors must then within six months after the approval of the by-law by the shareholders apply to the Secretary of State for supplementary letters patent. The by-law does not become operative until the supplementary letters patent confirming it have been issued. The following documents are required: — (1) Petition for supplementary letters patent signed by the directors or a majority of them. PROCEDUEE FOR ALTERATION OF CAPITAL,. 273 (2) Declaration verifying signatures to the peti- Sees. 51-57. tion. (3) Declaration verifying the truth of the facts set out in the petition and the bona fide character of the increase, decrease or sub-division. (4) Declaration by a responsible officer of the com- pany proving the due passing of the by-law and pro- ducing and verifying the following: — (a) Copy of such by-law duly certified under the seal of the company and signed by the President or Vice-President and by the Secretary; (b) A copy of the proceedings at tbe meeting of shareholders with respect to the confirmation of the by-law ; (c) An extract from the general by-laws of the company setting out the provisions applicable to the calling of meetings of shareholders ; (d) A copy of the notice or advertisement as the case may be summoning the meeting of shareholders. In any case of reduction of share capital publica- Further re- tion of the reasons for reduction or other information ^^ tbTcls? with regard thereto may be required (s. 54f). ^^^ ^j ^^f "tai°° In re Truman, Hanbury, Buxton & Co. (1910) 2 Ch. 498. In all cases of reduction of capital the company is required to add the words '' and reduced " to its name until such date as is fixed by the Secretary of State. Whore tlie reduction does not involve the diminution of liability or paying off any paid-up share ca])ital they are only required to be used from the time of the presentation of the petition ; and the Secretary of State may dispense allogetlier with the use of the words, but under the English practice this is rarely done. It was done in In re Australian Estates and Mortgage Co. (1910) 1 Clh 414 on the ground that the company would be injured by the addition. Where a diminution of liability or a return of paid up capital are involved the words must be used from the date of the confirmation of the by-law. And in both D.C.A. — 18 274 DOMINION COMPANIES ACT. Sees. 51-57. i-asos iiiulor tlic Eiii^lisli practice the use oi' this addi- tion is geiierally required for a period of one month. Whore the proposed reduction of share capital in- volves a diiniiuition of liability or a return of paid-up capital, and in any other case if the Secretary of State so directs, the Secretary of State must settle a list of the creditors of the company entitled to object to the reduction and follow the additional procedure set out ill s. 54B for obtaining their consent or dispensing with it on the terms set out in the section. Doubtless under ss. 54B ff. the practice under the corresponding sec- tions of the Imperial Act will be largely adopted, as to which see Palmer Precedents, Part 1 (ed. 1912), p. 1287. Cousolida- tiou of shares. The provisions with respect to the confirmation of the by-law and the obtaining of supplementary letters patent do not apply to a by-law consolidating the exist- ing shares of the company into shares of a larger par value. It is to be noted that the right to consolidate shares is only given where the par value of the shares is less than $100 each, and the shares as consolidated must not exceed the par value of $100 each (s. 51). If it is desired to issue shares of a greater par value than $100 each the proper provision for that purpose should be embodied in the petition for incorporation. Calls within the first year. Calls for residue. Calls. 58. Not less than ten per centum upon the allotted shares of stock of the company shall, by means of one or more calls formally made, be called in and inade payable within one year from the incorporation of the company. 2. The residue sliall be called in and made payable when and as the letters patent, or the provisions of this Part, or the by-laws of the company direct. 2 E, VII., c.l5, s. 46. Call when demand made. Interest on calls. 59. A call shall be deemed to have been made at the time when the resolution of the directors authorizing such call was passed. 2 E. \U.. c 15, s. 47. 60. If a shareholder fails to pay any call due by him, on or before the day appointed for the payment thereof, he shall be CALLS. -^ ' liable to pay interest for the same, at the rate of six per centum Sect. 60. per annum from the day appointed for payment to the time of actual payment thereof. 2 E. VII., c. 15, s. 47. 61. The directors may, if they think fit, receive from any pajTuem jq shareholder willing to advance the same, beyond the sums then advance on actually called for, all or any part of the amounts remaining ^ii-^res. impaid on the shares held by such shareholders. 2. Upon the money, so paid in advance, or so much thereof, interest may as, fi-om time to time, exceeds the amount of the calls then made be allowed. upon the shares in respect of which such advance is made, the company may pay interest at such rate not exceeding eight per centum per annum, as the shareholder who pays such sum in advance and the directors agree upon. 2 E. VII., c. 15, s. 48. 62. If after such demand or notice as is prescribed by the Forfeiture of letters patent, or by resolution of the directors, or by the by-laws shares for of tlie company, any call made upon any share is not paid ^vithin "f^a?rs^'™^°^ such time as by such letters patent or by resolution of the direc- tors or by the by-laws is limited in that behalf, the directors, in their discretion, by vote to that effect duly recorded in their minutes, may summarily declare forfeited any shares whereon such call is not paid. 2. Such shares so declared forfeited shall thereupon become Revert to the property of the company, and may be disposed of as the company, company by the by-laws or otherwise prescribes. 3. Notwithstanding such forfeiture, the holder of such shares Liability of at the time of forfeiture shall continue liable to the creditors of J,^"g[{f^''jj^j.g° the company at such time for the full amount unpaid on such shares at the time of forfeiture, less any sums which are subse- quently received by the company in respect thereof. 2 E. VII., c. 15, s. 49. 63. The directors may, if they see fit, instead of declaring Enforcement forfeited any share or shares, enforce payment of all calls, and "[ ^'."?,'"5"'^ interest thereon, l)y action in any Court of competent j^i'isdic- ."^..t^j'^'n'^ '^ tion. 2. In such action it siiall not be necessary to sot forth the What only special matter, but it shall be sufficient to' declare that the ^'JJi^'^g^^fj,,,.! defendant is a holder of one share or more, stating the number ,„.ovp(i.' 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 sihiire or more, .stating the number of calls and the amount of each call, whcrebv an action has accrued to the company under this Part. 2 E. VIT., p. 15, s. 50. 271) DOMINION COMPANIES ACT. Sees. 58-63. Calls. Definition of call. Discretion of directors. Instalments distinguished from calls. How made. Procedure in making calls. Regularity of calls. Proof of making call. Prepayment of shares. Notice of call. Enf 01 cement of payment of calls. Defences to action for calls. Forfeiture. Liability or disability apart from forfeiture. Regularity of forfeiture. Procedure. Cancellation. Surrender. Definition of call. Discretion of directors. The term '' call " is an expression used to denote both a demand for money and the sum demanded, and in this last sense it signifies either the whole sum re- quired to be raised at one time from the shareholders of a company by contribution amongst themselves or that proportion of this entire sum which is payable in respect of each share. See also Re Port Arthur Wagon Co., Tudkope's Case (1919) 45 0. L. R. 260, 268. Section 58 provides that not less than ten per centum on the allotted shares of the company shall be called up within a year from the date of incorporation. It appears that this section, like section 26, is directory only, and that the failure of the directors to make the prescribed calls has not the effect of putting a share- holder in arrears so as to prevent his making a transfer of his shares : Ontario Investment Association v. Sippi (1890) 20 0. R. 440. Since the Act contains no pro- visions as to how the balance of the allotted shares shall be called up, the time and the manner of calling up the stock depend on the provisions of the letters patent or the by-laws relating to calls. Hence, if the letters patent or by-laws contain no restrictions the CALLS. 277 directors may make calls as they see fit in the exercise Sees. 58-63. of their discretion, subject only to the limits which are ~ '. set, first, by the rule that no calls can be made upon the of Directors. shareholders of any company for any purposes not warranted by the constitution of that company; secondly, that the shareholders are not bound to con- tribute more than the capital which may have been agreed upon ; and thirdly, where shares liave been sub- scribed for on the basis of a prospectus or an agree- ment whereby they are payable by fixed instalments the directors can not increase those instalments or make the shareholder anticipate the date of payment by means of calls. The Court will not interfere with the discretion of directors in making a call; for example, on the ground that the money is not wanted for the purposes of the company, or on any other ground except mala fides: Odessa Tramways v. Mendel (1878) 8 Ch. D. 235, but this holding is to be taken as subject to the exception that no call can be made in anticipation of the in- stalment provided for in the subscription. The directors, in the absence of statutory restric- tion, can call up all the amounts unpaid in respect of shares at one time: Lake Superior Navigation v. Mor- rison (1872) 22 U. C. C. P. 217. Where a call is made upon all shareholders without discrimination or impartiality the Court will not inter- fere to determine whether it was necessary or not. But if calls were made in such a way as to favor one set of shareholders the Court might interfere to protect them: Christopher v. Noxon (1884) 4 0. R. 672, the I'ulc being that calls must be made on shareholders equally. Elven where the articles of a company gave the power to make calls on some members and not on others it was held that this did not justify the making of a call on certain members only on the ground tliat they liad been dilatory in paying former calls: Gallo- way V. Halle Concerts Society (1914-5) .31 T. L. R. 4G9. So where directors in making a call excluded a large amount of stock held abroad it was held in an action '-78 DOMINION COMPANIES ACT. Sees. 58-63. i'or a call against a shareholder in Canada that the t;: .. assessment was not an equal assessment and was there- of Pirectors. loro Dad. And although the directors were empowered in making an assessment to restrict it to half the stock, it was held that this would not justify excluding part of the stock altogether, but at most allowed them to make an equal assessment on all the stock to that ex- tent: European and N. A. By. Co. v. McLeod (1875) 16 N. B. 3. Even though the articles of association of a com- pany may permit the directors to make a difference between shareholders in the amount of calls and the time of payment, it is a breach of duty on the i)ai"t of directors to favor themselves in this regard unless they inform the shareholders and get their consent: Alex- ander V. Automatic (1899) 2 Ch. 302. The general rule that directors must not favor themselves applies where the contribution exacted from the shareholders is not fechnically a call: Peterborough Cold Storage Co. (1907) 14 0. L. R. 475. In an action for calls respondent alleged that the subscriptions of two shareholders had been reduced on the subscription book after the respondent subscribed for his shares, and the call having been made against these shareholders on the reduced amount was unequal and therefore invalid. Held, that while admitting the principle that calls must be equal the respondent had failed to prove that the 'calls were either illegal, par- tial, or unjust': National Insurance Co. v. Hatton (1879) 2 L. N. 238, 24 L. C. J. Q. B. 26. A company which is in difficulties may make a call to prevent the transfer of shares: Gilbert's Case (1869-70) L. R. 5 Ch. 559, and a call may be made to in- crease the saleable assets of a company to the amour t thereof: Netv Zealand, Sc, Co. v. Peacock (1894) 1 Q. B. 622. Instalments distinguished from calls. Instalments Instalments payable under agreement to purchase distinguished , x n i, j.i i t_ i,t from calls: sliares are not calls, e.g., where there has been a public issue and shares are subscribed for on the terms of a prospectus providing for payment by instalments : CALLS. • 279 Alexander v. Automatic (1900) 2 Ch. 56. See also Sees. 58-63. Re Port Arthur Wagon Co., Tudhope's Cuse (1919) 45 0. L. R. 260. In Graham Island Collieries v. McLeod (1914) 16 D. L. R. 281, Macdonald, C.J.A., and Martin, J.A., of the British Columbia Court of Appeal, said instalments, that a stipulation that the balance due under a sub- scription should be payable on call within eigh- teen months after allotment meant that the bal- ance should not be payable within eighteen months except on call, but that after the expiration of such time the balance became due and payable without call. It is difficult to see, however, what answer the company could have in such a case to the defence of the shareholder that he was entitled to hav6 the terms of his agreement adhered to. The question arises whether default in the pajanent of instalments as distinguished from calls will enable directors to forfeit shares. Unless the prospectus or agreement on which the shares are sold expressly enables the directors to forfeit for non-payment of instalments it is submitted there is no such power. The proper procedure is to make a formal call and then, in the event of further default, to declare a forfeiture under section 62 for non-payment of the call. Section 66 provides that no share shall be trans- ferable until all previous calls thereon are paid; in the absence of authority it is extremely doubtful whether shares on which instalments are overdue are similarly incapable of transfer. See now Uc Port Arthur Wduon Co., supra. Generally there is no liability to pay for shares f^,, until a call is made, and notice thereof given to the [""^^j^j °^ shareholder, and until that time the statute of limita- tions does not run against the company. Therefore, persons named as shareholders in a charter issued in 1880 were in in 1S91 held liable to pay the amount of their shares, no foinwil call having been made in the meantime: lie Jlagf/art Bros. IManufacturinn Co.; Peak fir's and Runion's Case (1892) 19 A. R. 582, and see Alexander v. Automatic Telephone Co. (1900) 2 Ch. 56. mmence- of ty. 280 DOMINION COMPANIES ACT. Sees. 58-63. An agroomeiit that a sliarelioldor shall not be liable for calls is ultra vires: Ex p. Clark (1869) L. R. 7 Eq. 550; Bmin's Case (1860) 2 De G. F. and J. 275, and see Re Lake Ontario Navigation Co, (1909) 20 O. T.. 11. 191 ; and when a call has boon made a sharolioldor can not be released from his liability to pay it : Mother Lode Con- solidated V. Hill (1903) 19 T. L. R. 341. If a person sui juris is beneficially entitled to shares and the registered holder has paid calls thereon the beneficial owner is bound to indemnify him : Hardoon V. Belilios (1901) A. C. 118. Where a call is made after the death of a shareholder his executors are liable to pay it out of his assets : New Zealand Gold, &g., Co. v. Peacock (1894) 1 Q. B. 622. How made. Sections 58, 59 and 80 contain the provisions of the Act relating to the making of calls. Directors are governed with respect to the exercise of their power to make calls by all such restrictions and limitations as are contained in the Act, letters patent and by-laws, s. 58 (2), and can only make calls at such times, and after such notice and for such amounts as are pre- scribed in the letters patent and by-laws, see Re Pyle Works (1890) 44 Ch. D. 534. It is not altogether free from doubt whether it is necessary that there should be a by-law either specific- ally making the call itself or providing in general terms that calls should be made in some other way than by by-law, e.g., by resolution of the directors. Section 58 (2) seems to imply that the jjassing of a by-law is necessary, and section 80, which states that the direc- tors may pass by-laws regulating the making of calls, looks to the passing of a general by-law defining the procedure to be followed by the directors in making calls. On the other hand section 59 provides that a call shall be deemed to have been made when the re- solution of the directors authorizing the call was passed, thus indicating that a call may be made by simple resolution of the directors; and in Portland and Lancaster Steel Ferry Co. v. Pratt (1850) 7 N. B. 2 CALLS. 281 Allen 17, it was held that where the charter provided Sees. 58-63. that shares were to be issued in such manner as the by-laws of the company should direct and be paid in such sums and at such times as the directors should appoint, it was not essential to the company's right to How made sue for calls that by-laws for issuing the stock should have been made, provided that the directors who made the calls were duly appointed. In Rascony Woollen and Cotton Manufacturing Co. v. Desmarais (1886) M. L. R. 2 S. C. 381, it was held that where no by-law exists calls may be made as pre- scribed by the directors. See also Union Fire Insur- ance Co. V. O'Gara (1883) 4 0. R. 359. The better procedure is to pass a by-law and to have it confirmed by the shareholders in the organization stage of the company. The by-law should provide that one or more calls may be made by resolution of the directors at such intervals, for such amounts and with such provisions as to notice, time of pajnnent, etc., as the directors shall see fit. BY-LAW PRESCKIBING MODE OF MAKING CALLS. 'The directors may by resolution from time to time make such calls as they think fit upon the shareholders in respect of all monies unpaid on the shares held by the shareholders respectively and not by the conditions of allotment thereof made payable at fixed times, and each shareholder shall pay the amount of every call so made on liim to the persons and at the times and places appointed by the directors. A call may be made pay- able by instalments.' Procedure in making- calls. With such a by-law as tlie foregoing in force a call is properly made by resolution which must be passed : (1) By a quorum of the directors (2) duly (lualificd (3) duly elected (4) and at a meeting regularly convened. '2S'2 DOi\rINI^N COMPANIES ACT. Sees. 58-63. The rosolution slioiikl specify: (a) The amount of the call. (b) The date appointed for payment. (c) The bank or other person to "whom and the ]>Uice where payment is to be made, and if the letters ]»ateiit or by-hiws do not contain any relevant provi- sions, Procedure. (d) The length of notice of call. (e) The date after which shares are liable to for- feiture if the call is not paid, and (f) The manner of service of notice of call, the provisions relating to which should conform to s. 97 of the Act. The following form of resolution may be used : RESOLUTION FOR CALLS. ' That a call of $ per share be and the same is hereby made on each of the- shareholders of the com- pany, and that such call be payable on the day of 191 , to the company at the head office, (address).' If no tirne is limited by the letters patent or by-laws for payment of the call add, 'That days' notice of this call shall be given to every holder of unpaid or partly paid shares, and if the call is not paid within days of the date appointed for payment the shares in respect of which such call is not paid shall be liable to forfeiture.' If the letters patent or the by-laws contain no pro- vision as to demand or notice to be served on share- liolders in respect of a call, add the following: 'And that the secretary of the company be and he is liereby ordered to serve on each holder of unpaid or partly paid shares a notice of the above call by send- ing such notice through the post in a registered letter addressed to such shareholder at his place of abode as it appears on the books of the company.' The contents of the foregoing resolution may be considered under the following headings : ire. CALLS. 283 (a) Amount of call. Sees. 58-63. It is essential that the amount of the call in respect pj-ocedur of each share should be specified. The directors have a discretion as to the amount to be called and the Court Aidll not interfere ^vith the discretion of the directors in thatregard : Odessa Tramways v. Mendel (1878) 8 Ch. D. 235. (b) Date appointed for payment. The call must fix the time for payment: Re Caivley do Co. (1889) 42 Ch. D. 209. The time for payment should appear in the formal resolution and cannot be fixed by mere verbal direction to the secretary: John- son V. Little's Iron Agency (1887) 5 Ch. D. 687. (c) Place of payment. This should be stated in the resolution : Re Caivley S Co., supra. It was held in Union Fire Insurance Co. V. O'Gara (1883) 4 0. R. 359, that it was insufficient if the notice alone named the place of payment, but in Provident Life Insurance and' Investment Co. v. Wilson (1865) 25 U. C. R. 53, where the charter expressly pro- vided that shares should be paid ''by such instalments and at such times and places as the directors of the cor- poration shall appoint," it was held a fatal objection to an action for a call that the directors had appointed no place of payment. Regularity of calls. A call to be valid nuist be made at a i-cgularly con- vened meeting at which a quorum of duly elected and duly qualified directors are present. If tlie meeting is irregularly held, e.y., if absent directors have not con- sented to the meeting being held in their absence, even though the requisite number are present they cannot make a valid call: Canadian Ohio v. Cochrane (1915) 7 0. W. N. 698, 8 0. W. N. 242. The presence on the board of persons who are not legally qualified to act as such will not invalidate the act of the board done by a legal f|iio)urii of tlie piopn-ly <|ii;ilified directors: Mor- 284 DOMINION COMPANIES ACT. Sees. 58-63. ^e» WooUcn Mills v. HacckeiJs (1908) 17 Man. 557, a ~ ' case decided under the Manitoba Companies Act, R. S. M. 1902, c. 30. And where the articles of a company Kosuiarity dechire that the acts of disqualified directors shall be of caUs. valid, a call may be good tiiough one of the directors necessary to make a quorum is not qualified: Alberta Improvement Co. v. Peverett (1914-15), 7 W. W. R. 757. where the English cases are collected. The power to make calls being discretionary cannot be delegated: Provident Life Insurance Co. v. Wilson (1865) 25 U. C. R. 53. If powers are attempted to be exercised by an insufficient board of directors such at- tempted exercise is invalid : Twin City Oil v. Christie (1909) 18 0. L. R. 324; see also Garden Gulhj United Quartz Mining Co. v. McLister (1875) 1 App. Cas. 39; Alma Spinning Co., Bottomley's Case (1880) 16 Ch. D. 681; Hotvbeach Co. v. Teague (1860) 5 H. & N. 151, Austin's Case (1871) 24 L. T. 932. Where provisional directors before letters patent are granted attempt to make a call, confirmation or adoption of the resolution making the call by the direc- tors after the issue of the letters patent is necessary in order to make the call valid : Toronto Gas Co. v. Russell (1850) 6 U. C. R. 567, and Cazelais v. Picotte (1900) Q. R. 18 S. C. 538. But in this connection regard must be had primarily to the powers conferred by the governing statute on the provisional directors. While an irregularity in making a call renders the call invalid, if a call be made by a proper authority for proper purposes it is not every trifling irregularity that will vitiate it: British Sugar Refining Co. (1857) 3 K. & J. 408. The illegality of a second call does not invalidate a former call because contained in the same resolution : Union Fire Insurance Co. v. O'Gara (1883) 4 0. R. 359. A defective call can be subsequently confirmed by a regular meeting of the directors: Austin's Case (1871) 24 L. T. 932. Shareholders may waive informalities, so where they have assisted in the making of calls they can not CALLS. 285 subsequently object that such calls were improperly Sees. 58-63. made: Christopher v. Noxon (1884) 4 0. R. 672; and see as to the effect of waiver of formalities by share- holders : Fort William Commercial Chambers v. Braden „ , .^ (1914) 6 0. W. N. 24. Questions as to the legality or of calls. regularity of calls sometimes arise where the Act of incorporation provides that successive calls may be made only after specified intervals, or after certain notice. The following are typical examples of such provisions : . Where the plaintiff's Act of incorporation (5 Wm. IV., c. 48) required thirty days' notice to be given of the calls for the payment of each instalment of the capital stock it was held (1) that the full time of thirty days must elapse between the times appointed for pay- ment of the several instalments; (2) and that it was not sufficient in one notice to call for pa5''ments of several instalments at intervals of less than thirty days: *S'^. John Bridge Co. v. Woodivard (1840) 3 N. B. 1 Kerr 29, see also National Insurance Co. v. E(jlesoH (1881) 29 Gr. 40G; Gas Co. v. Russell (1850) 6 U. C. R. 567. Where by the Act of incorporation of the company it was provided that no instalment should be ''called for or become payable in less than thirty days" after notice, etc., it was held by Spragge, C.J.O., and Jlagarty, C.J., that the time fixed for the payment of instalments need not be thirty days apart; but that in- stalments might be made payable at any time, provided thirty days intervened between the date of notice of the call and the day on which it was payable. Burton and Patterson, J. J. A., however, thouglit that no instal- ment could be lawfully made paya])le in h'ss than thirty days from the date of payment of the next preceding instalment: Provincial Insurance Co. v. Worts, 31 U. C. C. P. 523; (1883) 9 A. R. 56. Wliorc an Act provided that "calls shall be made at iiitei*vals of thirty days and n|)oii notice to be given tliiit\ (lavs at least prioi- to the dav on wiiicli such call shall be payable," it was held that calls could not be 286 i)0,MlMO.\ COMPANIES ACT, Sees. 58-63. lo^-ally made at one time, and that in comimting- the interval the time must be reckoned exclusively of the day on which the previous call was payable : Bank of Nova Scotia v. Forbes (1883) IG N. S. 4 Rnss. & Geld. 295. Regularity The Railway Clauses Consolidation Act (Can.), 14 and 15 Vict. c. 51, provided that no call should be made '*at a less interval than two months from the previous call." It was held that calls made on the first of Sep- tember, first of November, first of January were bad : Buffalo, Brantford and Goderich By. Co. v. Parke (1885) 12 IT. C. R. 607; see also Port Dover and Lake Huron By. Co. v. Grey (1875) 36' U. C. R. 425. And where in similar circumstances the shareholder paid one call and then assigned his shares, he was held not liable for the other calls: Moore v. McLaren (1862) 11 C. P. 534. AVhere calls on stock were to be made ''at periods of not less than three months' interval " and one call was made payable on 10th August and another on 10th November, it was held that the necessary interval had not elaiDsed between the two calls and that the second call was, therefore, bad: Stadacona Fire Insurance Co. v. Mackenzie (1878) 29 U. C. C. P. 10. Effeotof dis- In an action against a shareholder for the amount organization. ^^ j^-^ ^j^p^j J sliares, it was provcd that the officers and directors of the company had resigned and had not been replaced. The Court made an order requiring the company to proceed to the election of new officers and of a curator according to 371 CC. and produce acts thereof before proceeding with the case : La Com- pagnie d' Instruments Agricoles v. Hebert (1875) 2 Q. L. R. 182. See also 31 Vict. (1868) c. 25, s. 20 Que. An action for calls by a pretended officer on behalf of a company which had fallen into complete disorgani- zation, and had neither president nor directors, was dismissed: La Comparjnie du Cap Gibraltar v. Lalonde (1889) 5 M. L. R. S. C. 121 ;Massaivippi Valley By. Co. V. Walker (1871) 3 Rev. Leg. 450. CALLS. 287 Proof of making a call. Where calls are made by by-law a copy of tlie by- Sees. 58-63. law under tlie corporate seal and purporting to be signed by an officer of the company is prima facie evi- dence of such by-law, s. 109. If the calls are made by resolution they may be proved by entry in the direc- tors ' minute book showing the making of the call : Ross V. Machar (1885) 8 0. R. 417. It should be noted that the directors' minute book is not one of the books re- quired to be kept by the company by s. 89 of the Act and is, therefore, not by s. 107 made prima facie evidence of the facts therein stated. Notice of call. A proper notice must be served on each shareholder bringing to his attention the fact that a call has been made and requiring him to pay the amount due in re- spect of the shares held by him. The principle on which a shareholder is entitled to notice of a call is that it is unjust for him to be treated as in default until he has received notice of the making of the call. This rule applies not only where notice is expressly required by the statute, the letters patent or the by-laws, but also where there is no express provi- sion on the subject and the shareholder has entered into an absolute covenant to pay such calls as may be made : Miles v. Bough (1842) 3 Q. B. 845. On the other liand, if the shareholder has been notified of the call, it is immaterial as far as his liability is concerned that other shareholders have not received notice or that the notice given them is defective : Newry and Inis- killni liy. Co. v. Edmunds (1848) 2 Ex. 118 : ShacJde- ford V. banfjerfidd (1868) L. R. 3 C. P. 407. Notice of call is, of course, ineffective unless the shares have been allotted: Ur Canadian Tin Plate Dc coratiiif/ Co., Morton's Case (1906) I'J O. L. R. 594. The terms of the notice must coiTesi)ond with the (Iii-('ctions of the letters patent, the by-laws, or the by- law or resolution making the call. "^I'lms, when notices of calls required [)ayment on days different from those 288 DOMINION COMPANIES ACT. Sees. 58-63. provided for in the resolution of the directors, it was held tliat the calls were illeg'al, not being autJiorized by the resolution: London Gas Co. v. Campbell (185G) 14 Notice of U. C. R. 143. If the notice is irregular and the irregu- rnii. larity has not been waived the company is precluded from enforcing payment of the call against the person as to whom the notice is defective: Miles v. Bough (1842) 3 Q. B. 845. In Paul v. Kohold (1905) 2 W. L. R. 90; (1906) 3 W. L. R. 407, Harvey, J., at the trial thought that a notice of call need not set out in cur- rency the amount demanded from the shareholder. The judgment of Harvey, J., was reversed on appeal but on grounds which did not affect the above point. The manner of service of notices on shareholders is prescribed by s. 97 of the Act, which provides that notices may be served either personally or by sending them through the post addressed to the shareholders at their places of abode as they appear on the books of the company. The phrase "books of the company" presumably refers to the books required to be kept by s. 89 of the Act in which must be recorded the names alphabetically arranged of all shareholders and their addresses as far as can be ascertained. It has been held that a notice was properly directed when it was mailed by the secretary of a company to a female married shareholder at the address of her husband (who was a director) and which was given by him in all proceedings connected with the company, no address being registered or given on the certificate : Jones v. North Vancouver Land and Improvement Co. (1910) A. C. 317. The question arises, whether, if the registered share- holder is dead and his executors have not procured themselves to be registered as holders, the executors are entitled to notice of calls. In Allen v. Gold Reefs (1900) 1 Ch. 656, Lindley, M.R., at p. 670, held that the company was neither bound to send a notice addressed to the deceased shareholder nor to serve his legal per- sonal representatives with notice so long as they had not had themselves registered. In that case the articles CALLS. 289 provided that notices were to be sent to '^ members." Sees. 58-63. In a previous case where the articles contained no pro- vision as to notice to deceased members, the company not having been notified of the death of the shareholder, sent a notice of call addressed to him. The notice Notice of did not reach the executors and was returned to the ^^ company marked ''gone away," and it was held that under the circumstances the call had been properly made and that there had been sufficient notice thereof : New Zealand Gold Go. v. Peacock (1894) 1 Q. B. 622. See also as to rights of executors of a deceased share- holder: Lleivellyn v. Kasintoe Rubber Estates (1915) 81 L. J. Ch. 70. Section 3(d) of the Act defines the term shareholder to include the personal representa- tives of the shareholder, so that under the Act it would appear to be necessary to notify the personal representatives of the call in the event of the death of the shareholder. And in Glass v. Hope (1869) 16 Gr. 420, where the shareholder died and the payments on his shares went into arrear the company was held to be not able to declare a forfeiture of the shares in the absence of the personal representatives though none were appointed at the date of the forfeiture and none were appointed until several years thereafter. On the other hand s. 62 of the Act only contemplates that notice of some description should ])e given and does not specify to whom the notice must be sent pro- vided that it complies with the provisions of the letters patent or the by-laws or the resolution of the directors governing the matter, so that if the letters patent, by- laws or the resolution of the directors should contain an apt provision tliat notice addressed to the place of abode of the shareholder as it appears on the books of the company, there seems no reason wliy Nnv Zealand V. PeacocJi should not apply. It is, accordingly, im- portant that this by-law should contain a provision to tlie following effect : 'Any notice or document delivered or sent by post or left at the registered address of any shareholder n.c.A.— m -iH) DOMINION COMPANIES ACT. Sees. 58-63. shall, notwitlistaiuliiin- such sliaroliolder be then de- ceased, and ^vhether or not the company have notice of his decease, be deemed to have been duly served in respect of the shares, whether held solely or jointly with other persons by snch shareholder until some other person be registered in his stead as the holder or joint holder thereof, and such service shall for all pur- poses be deemed a sufficient service of such notice or document on his heirs, executors or administrators and on all persons, if any, jointly interested with him in such shares. ' Notice of A cestui que trust is not entitled to notice of calls : Armstrong v. Merchants Mantle (1901) 32 0. R. 387. At the time when the notices are sent out the mail- ing clerk should make a statutory declaration that the notices have been posted, and the declaration should be kept among the records of the company. As to what the declaration should set out, see s. 108 of the Act Where the letters patent provide that notices may be published in a newspaper a similar declaration of publication should be made by the secretary and a copy of the notice annexed to the declaration as an exhibit. In Buffalo, Brantford and Goderich Ry. v. Parke (1855) 12 U. C. R. 607, it was sought to prove a call on March 15th by the production of a Gazette of May 28th. This was held insufficient as the paper could not be taken as evidence of any notice prior to its date. The date of the call itself is the date of the resolu- tion of the directors authorizing it and not the date of the notice, s. 59; and see Re Londonderry Ry. Co. (1849) 13 Q. B. 998 ; Hhaw v. Lawley (1847) 16 M. & W. 810; Great North of England Ry. v. Biddulph (1840) 7 M. & W. 243. But see Gas Co. v. Russell (1850) 6 U. C. R. 567. Section 98 of the Act provides that a notice served by post shall be deemed to have been served at the time when the registered letter containing it would be de- livered in the ordinary course of post. Proof of the time requisite for the delivery of the letter containing the notice is made bv s. 108 sufficient evidence of the CALLS. 291 ■time of service. lu Union Fire Insurance Co. v. Fits- Sees. 58-63. Simmons (1882) 4 0. R. 359, notice of call was held to ~ have been duly given at the time of mailing the notice, but there was no section in that case corresponding to s. 98 of the Act. See contra, Ross v. Macliar (1885) 8 0. R. 417, the \iew of O'Connor, J.A., which must be taken to be the law under the Act. Prepayment of shares. Directors are not bound to permit shareholders to pay up shares in advance of calls : Re Atlas Loan, ex p. Green (1903) 30 C. L. T. 366. Under s. 61, however, the directors may accept payment in advance of calls and this is a valuable power and one which is frequently exercised: Lock v. Trotman (1896) A. C. 461. It is in the nature of a trust and accordingly directors should only receive money in advance of calls when it can be advantageously used for the purposes of the company. The rate of interest should not be excessive and in any event not exceed 8 per cent, per annum. See Poole, Jackson and Whyte's Case (1878) 9 Ch. D. 322; Re Pyle Works (1890) 44 Ch. D. 534. It has been held that money paid in advance can not be regarded as a loan to the company and can not be repaid to the share- holders by the company: London and Northern Steam- ship Co. V. Farmer (3914) 58 S. J. 594, Joyce, J. As to the rights of a shareholder making such advances in the event of a winding up see Wakefield & Co. (1892) 3 Ch. D. 165. Enforcement of payment of calls. If a call is not paid the directors can enforce the lial)ility of the siiareholder thereunder by action, s. 63. As to wliat the statement of claim must set out see s. 63 (2). Until tlie call is ))ai alliriiiatioii or laches and acquiescence will lea\t' the .shareholder liable: Sovereign Bank of Canada, Clark's Case (1916) 35 O. L. R. 448; 27 1). L. K. 253. Forfeiture. ir the shareholder fails to pay a call on the day appointed for payment, in addition to being liable to l)ay interest on the amount of the call at six per cent (s. 60) he is liable to have his shares forfeited. The- result of a forfeiture properly carried out is to extinguish all the rights and liabilities (subject to s. 62, sub-sec. 3) of the shareholder: Randt v. Wam- nright (1901) 1 Ch. 184. A person whose shares have been validly forfeited ceases to be a shareholder, and is not liable to be placed on the list of contributories on a winding-up: Re Acadia (1918) 3 W. W. R. 477. Power The power to forfeit is not inherent in a com- pany. It only exists where it is given by the statute under which the company is incorporated, and it is of no avail that a majority of the shareholders vote in favor of it: Barton's Case (1859) 4 Drew. 535: Clark V. Hart (1858) 6 H. L. C. 633. The power to declare shares forfeited is a trust which will be narrowly scanned by the court : Blisset V. Daniel (1853) 10 Hare 483. A company cannot arbitrarily appropriate a shareholder's shares: Acer V. Percy (1903) 5 Que. P. R. 401. The nature of the right to forfeit shares and the duty of the directors in exercising the right are explained by Lord Cran- worth in Spackman v. Evans (1868) L. R. 3 H. L. 171 at p. 86, as follows : — ''The power to declare shares forfeited was in- tended only to give the directors additional means of compelling payment of calls, or other money due from the shareholder to the company by virtue of the deed. The shares are in substance made a security to the company for the money from time to time becoming due from the shareholder. The duty of the directors when a call is made is to compel shareholder to pay to the company the amount due from him in respect of FORFEITURE. 295 that call ; and tliey are guilty of a breach of their Sees. 58-63. duty to the company if they do not take all reasonable means of enforcing pajnuent. In the present case it has never been suggested that the Appellant was insolvent, that he Avas not perfectly able to pay the full 30s. per share, which was the amount of his call; and it w^as a plain breach of trust in the directors to take, in discharge of the money due from the Appellant, shares over which they had power as security only for the money due, but which shares they knew to be valueless. They were bound as trus- tees for the body of the shareholders, to enforce the payment of the whole 30s. per share, and for that pur- pose to take all proper legal proceedings, unless they bona fide believed that he was not in circumstances which would enable him to pay the sum for which he was sued ..." Forfeiture must be for the benefit of the company, not for the benefit of a shareholder : Common v McArthiu- (1898) 29 S. C. R. 239; and though a for- feiture is presumed to be regular, Webster's Case, (1863) 32 L. J. Ch. 135, yet if it be shewn to be collu- sive or made for the benefit of the shareholder it is inoperative: Richmond's Case (1858) 4 K. & J. 305. The forfeiture of shares is not a species of for- feiture against which equity will relieve in the absence of fraud, accident or mistake : Sparks v. Liverpool Waterworks Co. (1807) 13 Ves. 428. It' calls are unpaid and the com))any is proceeding to forfeit the shares, but the 'shareholder has brought an action for rescission of his subscription the forfeit- ure will be restrained until the trial of the action on pajTTient into court of the amount of the call and interest: Jones v. Pacaya Rubber (1911) 1 K. B. 455. Buckley, L..J., at )). 459 of tlic report guarded him- self against saying that a dlffci-ciil order would be made if tiie shareholder had not been willing to pa.v the money into court. Where a call has been made and a note is given by the shareholder the result is merely to give time, and if the note is not p;iid tlie shares can -96 DOMINION COMPANIES ACT. Secs.58-63.be forf cited: Freeman v. Canadian Guardian (.1908) 17 0. L.R. 296. Forfeiture. After forfeiture lias once taken place the remedy aj::aiiist the company is not in damages but a declar- ation that the forfeiture is a nullity, ibid., per Riddell, J. Though it is an indexible rule that apart from express power a company cannot purchase its own shares: Trevor v. Whitivorth (1887) 12 App. Cas. 409, it may by a bona fide forfeiture become owner of them. In such a case the shares do not necessarily become merged or extinguished but may be sold or reissued: Commomvealth v. Boston R. Co. 142 Mass. 146. As to the status of forfeited shares see Law Quarterly Review, 1914, p. 339. Where shares have been forfeited and are resold by the company discharged from all calls prior to the date of the certificate of proprietor- ship delivered to the new shareholder, the latter is still liable for future calls, even the certificate goes on to say that the balance due on the shares has been called up and is payable by the prior owners of the shares : Ne-w Balkis Eesterling v. Randt (1904) A. C. 65. The com- pany may on reselling shares, w^hich have been partly paid up before forfeiture, give credit for payments made by the prior holder: Morrison v. Trustees, &c. (1899) 68 L. J. Ch. 11. To do this is not an infraction of the rule against issuing shares at a discount, ibid.; but quaere whether forfeited shares on which nothing liad been paid could be disposed of at less than their par value, or w^hether forfeited shares could be resold for a less sum than their par value less calls already received by the company. See Randt Gold Mining Co. V. Wainivright (1901) 1 Ch. 184, at pp. 187 and 188. If the forfeited shares are cancelled or not reissued there is a consequent reduction of the capital stock, but the express provision of the act giving the directors power to dispose of shares forfeited as they see fit, by by-law or otherwise, no doubt overrides the general provisions prohibiting the reduction of the capital stock without a two-thirds vote in value of the FORFEITURE. 297 shareholders at a general meeting of the company and Sees. 58-63. confirmation by supplementary letters patent. A company'having the power of forfeiture declared Forfeiture. forfeited a number of its £10 shares on which calls varying from £3 to £7 had been paid. In the course of the proceedings for the reduction of the capital of the company, the directors proposed to change the forfeited £10 shares into £5 5s. shares, credited with £2 5s. as paid thereon, and to offer these to the holders of the ordinary shares at the price of 30s. per each reduced forfeited share. It was held that the com- pany was not bound to treat the forfeited shares as if nothing had been paid thereon and that this was not in effect an issue of shares at a discount and that the article empowering the company to sell its forfeited shares was valid, and authorized the directors to deal with them in the way they proposed to do: Morrison v. Trustees, do. Cor. (1899) 68 L. J. Ch._ 11. A company can on the other hand if it so desires treat forfeited shares as unissued and as if nothing had been paid thereon, although in fact certain amounts liad been paid by the prior holders in respect of the shares: Re Victoria {Malaya) Rubber Estates Lim. (1914) 58 S. J. 706, decision of Astbury, J. Liability or disability imposed on the shareholder apart from forfeiture. It is to be noted that s. 62 (3) makes the former holder of forfeited shares liable to the creditors of the company at such time for the full amount unpaid on the sliares at the time of forfeiture less any sums which are afterwards received, and in this respect the section diffci-s in its wording from the Imperial Companies (Consolidation) Act, 1908, Tal)le A. s. 28, which makes the person whose shares have been forfeited liable to tlie co7npanij for arrears of calls. Forfeiture of shares involves cesser of membership in the company: Aaron's Reef's v. Tiviss (1896) A. C. 273, and forfeiture prevents the company from suing for past calls since such a proceeding can only be taken against q, person who is a shareholder: Stocken's '29S DOMINION COMPANIES ACT. Sees. 58-63. (\T5e (18G8) 3 Ch. 415. The liability of the former shareholder for the ainoinit of calls previous to the .H^^lhiHty of forfeiture of his shares under the Imperial Act is a siiaieiiokiers. li^jjiii^y .^g ji (U-btor uudcr the articles to pay calls and not as a shareholder: In re Rand Gold Mining Co. (1904) 2 Ch. 4G8. Accordingly under the Dominion Act the holder of shares in arrear as to calls is only liable to the company if the directors continue to regard him as a shareholder and sue him as such which they are authorized to do as an alternative to for- feiture by s. 63 of the act. In the absence of contrary provisions in the letters patent or by-laws, a shareholder is not entitled to vote at meetings unless he has paid all tlie calls payable on all the shares held by him, s. 88 (b). In Colonial Assurance Co. v. Smith (1912) 4 D. L. R. 814 it was held that where a shareholder had given a note in payment of a call and the note was overdue he could not under the provisions of s. 12 c. 53 of 52 Vict. (Manitoba) vote at an election of directors. The fact that he had been permitted to vote at previous meet- ings was immaterial; and the tender at the meeting of a cheque for the arrears did not remove the disquali- fication. Another shareholder whose note was still current was held entitled to vote. Shares on w^hich calls are unpaid cannot be trans- ferred, s. 66 and see the notes to that section. In an action for calls a defendant cannot avail himself of a provision in the act of incorporation that by non-payment the shares should become forfeited where nothing had been done under it: Ontario Marine Insurance Co. v. Ireland (1855) 5 U. C. C. P. 135: Marmora Foundry v. Jackson (1842) 9 U. C. R. 509. Nor is the existence in the company of such a right a valid defence on the part of the shareholder against creditors of the companv: Harris v. The Dry Dock Co. (1859) 7 Gr. 450. Regularity of forfeiture. When forfeiture is made the calls must have been regular and legal. They must have been made by the FORFEITURE. 299 proper officers of the company. The discretion to Sees. 58-63. make calls can not be delegated to a committee of the " directors : York Sc. Rij. Co. v. Ritchie, 40 Me. 425, Wat- son V. Eales (1856) 23 Beav. 294 and see cases under ss. 58-60 supra- at p. 284. An irregularity in the exercise of the right of for- Regularity f eiture, e.g., the irregular calling of the meeting of ° directors at which the resolution to forfeit is passed can not be cured by the shareholders confirming the action of the directors. It is the directors who are entitled to make calls and forfeit shares and the share- holders can not ratify something which is entirely within the powers of the directors: Paid v. Kobold (1905) 2 W. L. R. 90; (1906) 3 W. L. R. 407. A slight irregularity is as fatal as the greatest: Garden Mining Co v. McLister (1875) 1 App. Cas. 39: Johnson v. Lyttle's Iron Agency (1877) 5 Cli. D. 687. Thus where the board of directors is not legally appointed a resolution by them to forfeit stock is invalid. On May 31, 1880, the directors of a company passed a by-law reducing the number of the director- ate from five to three, and this was confirmed at an adjourned general meeting of the shareholders on June 1, 1880, and a new board of three forthwith appointed, but, it appeared no notice had been given either before the original, or the adjourned meeting, of the intention of making any such change in the directorate. It was held that the appointment of the board was not legal and a resolution by it to forfeit shares for non-payment of calls was invalid; also that the company was properly made a party to an action to restrain such forfeiture, the reduction of the direc- torate to a board of three being its act: Christopher V. Noxon (1884) 4 O. R. 672; and see Brady v. Stewart (1887) 15 S. C. R. 82. P)Ut \vii('i-e a company had power to confiscate and sell shares on which calls were not paid within a time fixed by notice, it was held that the sale was not invalid boeause the shares were not mentioned in detail n<»i- the amount paid on each set out in such ■MM) IJUMI.NION COMPANIES ACT. Sees. 58-63. notice^: GUmau v. lloi/al Canadian Insurance Co. ' (1884) 7 L. N. 60; 1 M. L. R. S. C. 1. S^'foJfSture. ^^ ""^'^^ ^^^^^ i" Nellis V. Second Mutual Building 'Society of Ottaiva (1881) 29 Gr. 399 that notice need not be given wliore it is dispensed with by the by-laws, but it is submitted, in view of the provisions of s. 62 of the Act, that the by-laws of the company or the resolution of its board of directors can not dispense with notice though tlie giving of such notice may be regulated. If the act, charter, or by-laws do not authorize directors to forfeit the shares of a member for a given cause or in a given manner, then a forfeiture for such cause or in such manner will be set aside as ultra vires, and the shareholder may be put on the list of contributories in a winding-up: Dixon's Case (1869) L. R. 5 Ch. 79. It has been held in Alberta that neither the liquidators of a company in a winding-ui) nor the creditors have the right to take advantage of any irregularities in proceedings taken for forfeiture of shares: /w Re Wade Co. (1908-9) 2 Alta L. R. 117. The company itself if it has treated the shares as forfeited can not thereafter take advantage of irregularities and claim to hold the shareholder liable as such : Web- ster's Case (1863) 32 L. J. Ch. 135. It is essential that the provisions of s. 62 be rigidly adhered to. Thus if the time within which the share- holder must pay the call is not limited by the letters patent, by-laws, or resolution of the directors as prescribed by the section, but is fixed by the notice merely, an attempted forfeiture will be ineffective: Armstrong v. Merchants Mantle Mfg. Co. Ltd. (1901) 32 0. R. 387 at p. 391. As to notice of forfeiture see further Robertson v. HochHaga Bank (1881) 4 L. N. 315 S. C. ; Provincial Insurance v. Cameron (1880) 13 C. P. 523; Oilman v. Robertson (1884) 7 L. N. 353, and 1 M. L. R. S. C. 5. In Fox v. Selkirk Land and Investment Co. (1912) 8 D. L. R. 945, it was held that notice of intended FORFEITURE. 301 forfeiture was necessary even though a by-law of Sees. 58-63. the company purported to give the directors power summarily to forfeit shares on which calls were " six J^eguiarig^^ months in arrear. In the case of an improper forfeit- ure the shareholder may not only bring an action for damages but he may also claim the stock itself and reinstatement as a shareholder, ibid. But see Free- man v. Canadian Guardian (1908) 17 0. L. R. 296. While the shareholder alone is the person entitled to receive notice of call and of subsequent proceedings and a cestui que trust cannot call on the company to account to him for shares purported to have been forfeited without notice to him: Armstrong v. Mer- chants Mantle (1901) 32 0. R. 387, it has been held that in the case of a deceased shareholder a forfeiture of his shares could not take place in the absence of his personal representatives although none such be appointed for many years: Glass v. Hope (1869) 16 Gr. 420. A forfeiture may be revoked by the company if it Revocation. agrees subsequently to receive payment of the call in arrear, but only if the shareholder whose shares have been forfeited consents thereto: Exchange Trust (1903) 1 Ch. 711. Procedure. If a call is not paid and it is desired by the directors to forfeit the shares of the delinquent shareholder the directors should pass a resolution authorizing the serving of a demand or notice requiring the call to be paid at a certain date and stating that if payment is not then made the shares will be liable to forfeilnro. The resolution may be in the following form: — 'Tliat notice be given by prepaid registered letter to the following shareholders who have made default in payment of the cjill made on day of l9 , that if such call is not paid on the day of 19 , by such shareholders respectively the shafes in respect (»r which the call remains unpaid shall be liable to forfeiture. oO'J nOIVllNION COMPANIES ACT. Sees. 58-63. Shareholder Number of shares Deiiot- iiig iinmbers.' Procedure. The Secretary should thereupon send to the share- holders in (lefnnlt, a notice which may be in the follow- ing' form : — Notice of intended forfeiture. * Sir, In my letter of the day of , I gave you notice that at a meeting, etc. (give particulars of call). I am now^ instructed to inform you that the directr ors require you on or before the day of to pay the said sum of $ ' together with interest thereon at the rate of six per cent, per annum from the said day of (the date when such call was payable) up to the date of payment, and that in the event of non-payment of the said call and interest on or before the said day of at the place aforesaid the shares in respect of which such call was made will be liable to be forfeited. I am &c. , Secretary. To &c.' If demand for payment and notice of forfeiture be not complied with the directors may then proceed to pass a resolution declaring forfeited the shares in default. The resolution may be in the following form : — Resolution for forfeiture. * That the holder of shares of $ each, numbered to -inclusive, having failed to pay the -call of $ per share made on the said shares on the day of 19 , and due on the day of 19 , and having failed to comply with the notice served upon him dated the day of 19 , the said shares be and the same are hereby forfeited. ' The secretary should communicate to the share- holder the fact that the shares in question were duly forfeited by resolution of the directors on such and such a date. CAXCELLATIOX, 303 Cancellation. By cancellation of shares may be meant the cancel- Sees. 58-63. lation of unissued share capital or lost capital which can only be effected under the provisions of s.s. 54 by means of a by-law for the reduction of capital con- firmed by supplementary letters patent. The term cancellation, however, is more commonly used as referring to the cancellation of the subscription for shares. After shares have been allotted, if no dis- pute exists as to the liability of the shareholders, there is no power to cancel a subscription, unless such power is created by express words and, apparently, it will not be raised by implication: Bichmond's Case (1858) 4 K. & J. 30d; Wheeler v. WUson (1884) 6 0. R. 421; Khinei/ v. Plunkett (1894) 26 N. S. R. 158. And it has been held in Ontario that the provisions of s. 18 of R. S. 0. (1897) c. 191 corresponding to s. 54 of the Act, which provides a mode for the reduction of capital, impliedly excluded such power of cancellation : Livingstone v. Temperance Colonization Society (1890) 17 A. R. 379; and see McGill Chair Company, Munro's Case (1912) 26 0. L. R. 254, where the authorities are collected. The power to cancel will be construed strictl} Stanhope's Case (1850) 3 De G. & S. 198; Re Patent Paper Mfq. Co., Addison's Case (1870) L. R. 5 Ch. 294. For a case where an agreement between the com- pany and the shareholder for the cancellation of a por- tion of the latter 's shares was unsuccessfully set up against the liquidator, see Fuches v. Hamilton Tribune (1885) 10 O. R. 497. If a shareiiolder disputes liis liability and is in a position to repudiate his subscription for fraud oi- misrepresentation the allotment of his shares to him may be cancelled. Thus where the defendant sub- scribed for shares on the faith of a statement of affairs pre[)a red by tlu^ secretary of the comi)any, and on find- ing that the statement was false i^rocured cancellation of his stoelv n^ ; shareholde:*'^' meeting it ^^as held in 304 DOMINION COMPANIES ACT. Secs.58-63.au action l)y a cri'ditor ol' llic c()iii])aiiy who had bocome yiich before the cancenation that there was Cancellation, po^ver to caiicel the stock, and that the power was duly exercised : Wheeler v. Wilson (1884) 6 0. R. 421. A trading- corporation lias power to compromise all claims against it including claims for cancellation of shares for fraud or misrepresentation but cannot compromise a claim for damages not connected in any way w^ith the validity of shares by a cancellation of them : Livingston v. Temperance Colonisation Society (1890) 17 A. E. 379. As to power to compromise with shareholders see also Copp's Case (1885) 10 0. R. 497. If shares have been agreed to be illegally issued and the matter is still in fieri the subscription agree- ment may be cancelled, but after the shares have actually been allotted and issued there can be no cancellation : Re Matthew Guy Carriage <& Automobile, Thomas's Case (1911-12) 3 0. W. N. 902 ; 1 D. L. R. 642. In this case there had been a subscription for shares to be issued at a discount. Before the stock had been allotted or any notice of allotment given, or corporate action taken with respect to the subscription, a resolu- tion was passed that all applications relating to the bonus stock should be cancelled and that any certifi- cates issued in respect thereof should be recalled. Certificates for the shares had been issued, but Middle- ton, J., held that the return of the subscriptions pur- suant to the above resolution and the substiUuion of new subscriptions thereafter was intra vires and binding upon the liquidator, who sought to make the defendant a contributory in respect of amounts on these shares. In re McGill Chair Company, Munro's Case (1912) 26 0. L. R. 254 at p. 262, Meredith, C. J. in referring to the foregoing case said that he found on enquiry from Middleton, J., that the latter had decided Re Matthew Guy on the basis that the contract to take the shaies was still executory at the time the resolution to cancel the bonus shares was passed. If the matter no longer remains in fieri and shares have CANCELLATION. 305 been issued, e.g., at a discount, and the shares have Sees. 58-63. been allotted, the certificate issued, and the subscriber ~~~ ~~ has acted as a shareholder, then, even though the shares were illegally issued at a discount, it is too late to cancel the certificate of shares actually issued and the shareholder will be liable in a winding up as a contributory in respect of the shares : McGill Chair Co. Munro's Case, supra. In that case the shareholders passed a lesolution that all stock certificates Avliich have been regarded in the light of bonus vstock l)e recalled into the company. This had been done in response to pi essure on the part of shareliolders hold- ing such stock, and the defendant had been present at the nioeting of shareholders and had voted in j'avor of the resolution. In pursuance of the resolution a new certificate had been issued to the defendant for the cimount of shares which he had paid up in full. Meredith, C. J., in his judgment reviewed the English authorities and held that cancellation or surrender of shares under the Ontario Companies Act could only take place where forfeiture would be permissible. Surrender. A shareholder can be got rid of by proceeding against him m invitum by way of forfeiture, but he cannot witliout statutory authority vokmtarily sur- render his shares and thus put an end to his liability: Common v. McArthur (1898) 29 S. C. R. p. 245; Winni- peg Hedge do Wire Fence Co. (1912) 22 Man. L. K. 83. If the company desires to regain control of the stock forfeiture is the proper procedure : Smith v. Gow- ganda (1911) 44 S. C. R. 621. The objection to the surrender of shares, whether fully paid or not, is that this is a reduction of the company's capital: Bellerbg V. Rowland (1902) 2 Ch. 14 at p. 32, and a nMlnctioii of ca])ital requires confirmation by supplementary letters patent under ss. 55 and 57. It is immaterial tliat tlie comjjaiiy was solvent at the time: Re Wall- bridge r.raU, CfK {Alia.) (1918) 2 AV. AV. R. 886. D.O.A.— 20 306 DOMINION COMPANIES ACT. Sees. 58-63. TJie power may, of course, be expressly given by statute, as to which see Hart v, Ontario Express and Transportation Co.; Kirk and Marling' s Case (1893) 24 "O. R. 340; In re Ontario Express and Transpor- tation Co. (1893) 24 0. R. 216 and (1894) 21 A. R. 646. Surrender Nor Can a shareholder surrender his shares to a trus- or sli&iircs tee for, or a nominee of, the company : Cree v. Somer- vail (1879) 4 App. Cas. 648; Re Union Fire Insurance Company, McCord's Case (1892) 21 0. R. 264. In the last mentioned case the manager of a company pur- chased a number of partly paid shares from the holder for the purpose of cancellation. The shareholder was not aware of the object intended. The transfer was made to the " Manager in Trust." It ^vas held by Boyd, C, that the transfer having been made without notice of the character in which the manager was to hold the shares it w^as a valid transfer which relieved the first holder of the shares from his liability thereon. Boyd, C, said at page 266, "No valid distinction can be drawn between the cases when the object of the transfer is to traffic in shares on the part of the company and when the intention is simply to cancel. In either case (no special power so to do being given to the particular company) the transfer is illegal, but liability upon the shares is transferred, or not, depend- ing on the knowledge or ignorance of the prior holder." There is no objection, on the other hand, to one shareholder, whether he is a director or not, with his ow^n money buying the shares of another and so getting rid of an objectionable shareholder, per Macnaghten, L.J., in Trevor v. Whitworth (1888) 12 App. Cas. at p. 409. Where, however, there is a power to forfeit which has become exercisable, the shares as to which there is default may be surrendered in lieu of forfeiting them in a formal manner: Bellerhy v. Rowland (1902) 2 Ch. 14 at p. 31. Also, when there is a bona fide dispute betw^een the shareholder and the company as to whether the shares have been legally issued, shares may be taken back by SUEKENDER OF SHARES. 307 way of compromise, but not where the shareholder on Sees. 58-63. the register admits that he is shareholder: Mother" T ourrender Lode Consolidated v.Hill (1903) 19 T. L. R. 341. Nor of shares. can the company take back some of the shares and leave the shareholder with the balance, ibid. But as to this, qucere. The question of the legality of surrender and can- cellation is fully dealt with in the recent case of Alberta Rolling^ Mills v. Christie (1919) 58 S. C. E. 208. The plaintiff subscribed for shares subject to a condition that the Company would erect a steel plant. It was held that the plaintiff had accepted the status of a shareholder so that the condition could only operate as a collateral agreement entitling him to surrender his shares and demand the return of the money paid for them. Anglin, J., delivering the judg- ment of the majority of the Court on the question of surrender or cancellation of shares said at pages 218, 219 and 220 of the report:— "Is such an agreement intra vires of the defendant company! T think not. In Guinness v. Land Corporation of Ireland (22 Ch. D. 349, at page 375) Lord Justice Cotton, after referring to section 38 of the English *'Comi)anies Act " of 18G2, corresponding to section 47 of the Con- solidated Ordinance of 1915, said: — 'From that it follows that whatever has been paid by a member cannot be returued to him. In my opinion it also foHows tliat what is descril)ed in the memoran- dum as the ca})ital cannot be diverted from the objects of the society. It is, of course, liable to be spent or lost in caiTying on the business of the coin])any, but no part of it can be returned to a member so as to take awav from the fund to which the creditors have a rii>-ht to look as that out of which they are to be paid. ' This passage is quoted witli ai)provaI in Trevor v. WJiitivorth (12 App. Cas. 409) by Lord Ilerschell, at p. 419, and by Lord Macnaghten, at p. 433. The defendant company in accepting a surrender of the plaintiff's shares could have only one of two purposes, either to extinguish them — an unlawful reduction of 308 DOMINION COMPANIES AC"r. Sees. 58-63. capital, or to ro-issuo them — an unlawful trafficking ;; ~ in its shares, an illei>-al use of its capital. Surrender ^ of shares. The law Oil tliese points as laid down in Trevor v. Whitwortli (12 App. Cas. 409) has been consistently followed ever since. The Companies Ordinance con- tains very strict provisions as to the conditions on which and the methods by which the capital of a com- pany subject to it may be reduced — sections 78 et seq. There is, of course, no pretence of compliance with these provisions. As put by Lord Macnaghten in a passage of his speech in Trevor v. Whltworth (12 App. Cas. 409), at page 437, quoted by Lord Herschell in British and American Trustee and Finance Corpor- ation v. Couper ( [1894] A. C. 399, at page 403) :— 'When parliament sanctions the doing of a thing under certain conditions and with certain restrictions, it must be taken that the thing is prohibited unless the prescribed conditions and restrictions are observed.' In Bellerhy v. Roivland S Marwood's Steamship Co. ( [1902] 2 Ch. 14) , it was held that :— A surrender of shares in a limited company, the company releasing the shareholders from further liability in respect of the shares, is equivalent to a purchase of shares by the company and is therefore illegaland null and void on the principle of Trevor v. Whitvorth (12 App. Cas. 409). The court was there dealing with shares partly unpaid. The surrender of fully paid-up shares with a return of the money paid therefor, is, of course, equally obnoxious. Both alike involve reduction of capital. While a surrender of shares which involves no reduction of capital may be supported {Rowell v. Jno. Roivell S Sons, Ltd. ( [1912] 2 Ch. 609), a surren- der involving such a reduction, not made under circum- stances which would have justified a forfeiture, clearly cannot be unless effected under sections 78 et seq. of the Consolidated Ordinance. How strictly the right of forfeiture, and of surrender to take its place, is viewed is illustrated in the recent case of Uopldnson V. Mortimer, Harley & Co. Ltd. ([1917] 1 Ch. 646, at page 653), >> TRANSFER OF SHARES. 309 Transfer of Shares. ggg-^^ q^ 64. Except for the purpose of exhibiting the rights of par- invalid with- ties to any transfer of shares towards each other and of render- out c^try. ing any transferee jointly and severally liable with the trans- ferrer to the company and its creditors, no transfer of shares unless made by sale under execution or under the decree, order or judgment of a court of competent jurisdiction, shall be valid for any purpose whatever until entry of such transfer is duly made in the register of transfers : Provided that, as to the stock Exception. of any company listed and dealt with on any recognized stock exchange by moans of script, commonly in use endorsed in blank and transferable by delivery, such endorsation and delivery shall, excepting for the purpose of voting at meetings of the company, constitute a valid transfer. 2 E. A^I., c. 15, s. 51. 65. No transfer of shares whereof tbe whole amount has Unpaid not been paid in shall be made without the consent of the shares, directors. 2 E. VIT., c. 15, s. 52. 66. Xo share shall be transferable until all previous calls With calls thereon are fully paid in. 2 E. VIT., c. 15, s. 54. "»P«i^- 67. . The directors may decline to register any transfer of Registration shares belonging to any shareholder who is indebted to the ^^ transfer, company. 2 E. VIT., c. 15, s. 55. 68. Any transfer of the shares or other interest of a de- Transfer by cea.sed shareholder, made by his personal representative, shall, personal rep- notwithstanding such personal representative is not himself a "'^*'"ta ne. shareholder, be of the same validity as if lie had been a share- holder at the time of his execution of the instrument of trans- fer. 2 E. VII., c. 15, s. 56. 68a. a compaDy, if so authorized l)y its letters patent orj^sueand supplemental ry letters patent and subject to the provisions ejTect of thereof may,^ with respect to any fully paid-up shares, issue J.JnJ^.^''^''" under its common seal a warrant stating that the l)oarer of the warrant is entitled to the share or shares therein specified, and may provide by coupons or otherwise, for the payment of the future dividends on the share or shares included in the warrant hereafter termed a share warrant. 2. A share warrant shall entitle the bojirer thereof to the uj^rhts of shares therein spefified, and the shares may l)e transferred bearer, by delivery of the warrant. .3. The bearer of a share warrant shall, subject to the pro- j>enror tobr visif)ns and regulations respecting share warrants contained in sharelioldir the letters patent or supplementary letters patent, be entitled, q" ^vJJrran'J on surrendering it for cancellation, to have his name entered on the books of the company as the holder of the shares specified olO DOMINION COMPANIES ACT. Sect. 68.\.. in siu'h sharo warrant, and tlie company shall ho responsible for any loss incurred by any person by reason of the company entering on the hooks of the company the name of the bearer of a share warrant in respect of the shares therein specified without the warrant being surrendered and cancelled. Rights of 4- The bearer of a share warrant may, if the provisions and bearer under regulations respecting share warrants so provide, be deemed to regii a lonb. ^^ .^ shareholder of the company either to the full extent or for any purposes defined by such regulations; except that he shall not be qualified in respect of the shares specified in the warrant for being a director of the company. Entries on 5. On the issue of a share warrant the company shall remove issue of from its books the name of the shareholder then entered therein warrants. 'IS holding such share or shares as if he had ceased to be a share- holder, and shall enter in such books the following particulars, namely : (i) the fact of the issue of the warrant; (ii) a statement of the shares included in the warrant, and (iii) the date of the issue of the warrant. Surrender of 6. Until the warrant is surrendered, the above particulars warrant. shall be deemed to be the particulars required by this Act to be entered in the books of the company in respect of such share or shares, and, on the surrender, the date of the surrender shall be entered as if it were the date at which a person ceased to be a shareholder. Warrant 7. Unless the bearer of a share warrant is entitled to attend holders not .^^^^ y^j.^ g^|- preneral meetings, the shares represented by such considered o ? i .; where vote share warrant shall not be counted as part of the stock of the of definite company for the purposes of a general meeting. 4-5 Geo. IV,, part of stock I Q-|. ^ oq „ o required. if-i*, c. <,o, s. -«. Transfer of shares. 1. Transferability of shares. 2. Necessity for registration. 3. Share warrants. 4. Death of shareholder. 5. Lost or stolen certificates. 6. Proof of transfer. 7. Rights of unregistered transferee against at- taching creditor. 8. Restrictions on transfer. 9. Transfers to escape liability. 10. Ineffectual and invalid transfers. 11. Effect of informalities and irregularities. 12. Estoppel. 13. Form of transfer. TRANSFER OF SHARES. 311 14. Remedies for refusal to register transfer. Sects. 15. Sale of shares— Contractual relation of trans 64-68a. feror and transferee. 16. Conflicting claims to shares before registration. 17. Shares held in trust— Rights of transferees. 18. Loans on the security of shares. 19. Loan of shares. 20. Transfer practice. 1. Transferability of shares. Shares in the capital stock of a company are per- sonal estate and transferable as such by the share- holder, s. 45, and see Re Poison Iron Works (1912) 3 0. W. N. 1269, 4 D. L. R. 193. For a definition of the term '' share " see Borland's Trustee v. Steel Brothers S Co. (1901) 1 Ch. 279 at p. 288. A company as well as an individual may become company the owner of shares by transfer, provided in the case transferee, of a Dominion company that it has the power to hold shares. conferred upon it by its charter and that it has complied with the provisions of s. 44 as to which see the notes to that section. A company itself can not purchase its own shares either directly, or indirectly, as by taking a transfer to its manager '* in trust," Re Union Fire Insurance Co., McCord's Case (1891) 21 0. R. 264. A transfer to an infant should not be per- infant mitted by the company especially if the shares are *'"'^°^ ^'■^^• not fully paid-up; for an infant would be entitled to repudiate the shares on attaining majority. Re Sover- eign Bank of Canada, Clark's Case (1915-16) 35 O. Tj. R. 448 at p. 456, and in the meantime calls could not be enforced against him. A transfer of shares by a infant minor is, like other contracts, voidable not void, and t>ansferor. being voidable only tlie company nmst register tlie transfer if it has not been avoided before the date of application for registration. Where shares have been acquired by a person who thereafter becomes a Lunatic lunatic these may be transferred by his committee ; as to the procedure in such cases in Ontario see the Lunacy Act R. S .0. (1914) c. 68. The Succession Duty Acts of most provinces forbid the transfer by foreign 31l2 DOMINION COMPANIES ACT. Sects. executors or adniiiiistrators of deceased shareholders ^^' ^^^- of shares of a company whose head office is in the pro- ForoiKM vince nntil snccession dnty has been paid or security given therefor. After the commencement of a wind- After ing-up no transfer of shares can be made without the wiuiimg-up. sanction of the liquidator under the authority of the court. AVhere, as under, the Ontario Companies Act, R. S. 0. 1914, c. 178, s. 54 (2), the share certificate is made prima facie, evidence of the title to the shares, the holder has prima facie evidence of title to compel the company to register the shares in his name : Lorsch S Co. V. Shamrock Consolidated (1917) 39 0. L. R. 315; 36 D. L. R. 557. 2. Necessity for registration. In the absence of special provision in the governing act or charter imposing conditions to the contrary an assignment of shares duly executed by assignor and assignee, for good consideration, with proper notice to the company, is valid without further registration : Crawford v. Provincial Insurance Co. (1859) 8 C. P. 263. Under the present Companies Act registration of the transfer is required to complete it, so as to con- stitute the transferee a shareholder in the strict sense. Section 45 provides that "the stock in the company shall be personal estate, and shall be transferable, in such manner and subject to all such conditions and restrictions as are prescribed by this Part or by the by-laws of the company." Section 64 makes entry of the transfer in the register of transfers necessary for its validity, subject to the reservations mentioned in the section. Until the transfer is registered the trans- feror and transferee remain jointly and severally liable to the company and its creditors, s. 64. It was, however, held in Hamilton v. Grant (1900) 30 S. C R. 566, that an unregistered transferee who had acted as an officer of the company and required the shares in question to qualify him as such, became a shareholder and that his transferor was not liable as shareholder to the- creditors of the company. Even without registra- TRANSFER OF SHARES. 313 tion, as between the parties, a transfer is valid and the Sects, company cannot refuse to register the transfer owing 64-68a. to non-pa}Tiient of a call made after the date of the ^ transfer but prior to the application for registration, Re Poison Iron Works, Limited (1912) 3 0. W. N. 1269, 4 D. L. R, 193. Additional formalities, unless required bv the charter or bv-laws, are not necessary to make the transfer complete and effective ; thus where the trans- fer had been registered and the transferee had in fact accepted the shares, signature by the transferee of formal acceptance was held to be unnecessary, not being required by the incorporating act, charter or by- laws: Ross V. Machar (1885) 8 0. R. 417; see also Woodruff V. Harris (1850) 11 U. C. R. 490. The exigencies of modern business often make it Transfer by inconvenient or impossible for the transferee, or each j^ ^'jant!^^'^ of successive transferees to get himself registered as the holder of the shares dealt with. A transfer of shares may, accordingly, be regarded from two stand- points — first, from a commercial standpoint, and, secondly, from a strictly legal standpoint. On the Stock Exchange the transfer is usually etfected by delivery of the shares endorsed in blank, the transfer not to be registered on the books of the company unless specially requested. The transfer confers on the holder of the certificate for the time-being, authority to fill in the name of the transferee, and each successive holder passes on this authority when he delivers the certificate to liis immediate transferee. In general the holder for the time being takes not the property in the shares but a title, legal and equitable, which will enable the holder to vest himself with the shares without risk of his right being defeated by any other j)erson deriv- ing title from the registered owner: Colonial Bank v. Cadij (1890) 15 App. Oas. 267 ; Smith v. Rogers (1899) 30 O. R. 256; Fuller v. Cli/n Mills (1914) 2 K.B. 168; Macdonald v. Bank of Vancouver (1916) 25 D. Tj. R. 567. The existing practice of transfer by delivery is ex- s.64. pressly recognized by s. 64 of llio Act in Ihe case of 314 DOMINION COMPANIES ACT. Sects shares of a company listed and dealt with on any 64-68a. recognized stock exchange; but the person so acquir- ing shares does not become a shareholder until he has the transfer registered, and a company can not dis- pense with registration or issue shares expressed to be transferable by delivery: General Company for s. Tnent of all calls: Moore v. MacLaren (1862) 11 C. P. 534, and Re Provincial Buildinc) Society (1891) 30 X. B. 628, but this situation appears now to be over- come by the discretionary power vested in the direc- tors. (6) SJiares with calls unpaid thereon. Shares with calls thereon unpaid are made by s. 66 res extra commercium, they are not transferable and neither the consent of the directors noranv action bv the company can validate an attempted transfer: Smith V. Goivganda (1911) 44 S. C. R. 621. The pro- liibition of the section extends to an unpaid liability in respect of shares even though it is not technically a call; and in Peterborour/h Cold Storarje Co. (1907) 14 O. L. R. 475, transfers by directors of their shares were lu'ld to !)(' iii\-;ili(1 where the directors had exacted a payment of twenty-tive per cent, from the other sub- scri])ei-s, but lind excused themselves from paying any- tliing and had t)-;insferred their slini'es to persons of no substance in order to escape liability. But the section doos not nppl\- wlici-c 1lir lialtility is not in respect of a call but in rcsjx'ct of inslalnioits due ilndei- agreement: Re Port Arthur Waf/on Co., Tud- hopp's Case (1919) 45 (). L. R. 260. Middleton, J., dis- tinguished Re Peterboroufih Cold Storaqn Co.. supra. and dissented from the dictum of Dull, .1., in Smith v. on transfer. I>l24 DOMINION COMPANIES A("r, Sects. Oowfianda, supra, and referred to In re Tloylake Ry. 64-68a._ Co., Ex p. Littledale (1874) L. K. 9 Cli. 257. itestriotious Where shares are purchased while calls are pending they cannot be transferred until such calls are paid and the brokers purchasing are not liable for failure to transfer: /'V/rrc'//, v. lUtcUe (1877) 1 L. N. 76. The non-payment of amounts claimed under an illegal and ineffective call does not prevent a valid and effective transfer of shares: Moore v. MacLaren (1862) 11 C. P. 534. (c) Shares of a shareholder who is indebted to the company. If the transferor is indebted to the company, not necessarily in respect of amounts due on the shares, the directors may decline to register a transfer of shares by him, s. 67 ; Imp. Act, 1862, Table A. 10. This right is in the nature of a statutory lien and it was held in McMurrich v. Bondhead Harbor (1852) 9U.C.Q.B.333, that there was no common law lien for general indebt- edness to the company; and where the incorporating Act did not confer the right it was held that a by-law providing for such a lien did not affect a purchase in good faith of the shares: McKain v. Canadian Birk- bech (1904) 7 0. L. R. 241. See also Montgomery v. Mitchell (1908) 7 W. L. R. 518. The company can assert its lien against an execution creditor of the shareholder, ibid. As to when the company will be estopped from asserting its lien, see Box v. Bird's Hill Sand Co. (1913) 12 D. L. R. 556, 23 Man. L. R. 15, and Cook V. Royal Canadian Bank (1873) 21 Gr. 1. The in- debtedness of the shareholder must exist at the time when the transfer is executed, and the fact that the shareholder has become indebted to the company be- fore the application for registration by the transferee does not justify a refusal by the directors to register : Re Poison Iron Works (1912) 3 0. W. N. 1269, 4 D. L. R. 193. Under the Imperial Act the material point of time is the date when the transfer is presented for registration: Buckley, 8th ed., 518. When the regis- tered shareholder is a trustee, the company has not a TRANSFER OF SHARES. 325 lien on the shares for the debt of the cestui que trust; Sects. Be Perkins (1890) 24 Q. B. D. 613. Even where the 64-68a. governing Act provides that no notice of any trust Restrictions shall be entered on the register and the articles state °° t^^^s^er. that the company shall not be bound to recognize any equitable interest, the company in the face of actual notice that the registered shareholder is not the bene- ficial owner, can not make advances to the shareholder and assert a lien on the shares against the bene- ficiaries : Mackereth v. Wigan Coal and Iron Co. (1916) 2 Ch. 293, 85 L. J. Ch. 601. The lien may be discharged by waiver or by agreement by the company with the shareholder incompatible with the continuance of the lien. A mere agreement, however, by a company ^\ith a shareholder indebted to it that the company may sell certain of his shares on the expiry of an extension of time given him within which to pay, in consideration of his making such agreement, will not itself amount to an abandonment of the lien: Bank of Africa, Limited v. Salisbury Gold Mining Co., Limited (1892) A. C. 281. (d) Other attempted restrictions on transfer. Subject to the above exceptions and to the special provisions affecting ''private companies" no restric- tion on the transferability of shares is authorized by the Act and directors have no discretion to refuse the registration of a bona fide transfer of paid up shares: In re Imperial Starch Co. (1905) 10 0. L. R. 22. More- over, directors cannot refuse to register transfers of shares to nominees to increase the voting power of a shareholder unless there is express power to decline : Str anion Iron and Steel Co. (1873) L. R. 16 Eq. 559. Tt has been attempted to fetter the riglit to transfer shares in various ways. In SmAth v. Bank of Nova Scotia (1882) 8 S. C. R. 558, it was unsuccessfully sought to be done bv resolution; see also Be Dominion Oil Co. (1903) 2 O.'W. R. 826. Tn Good and Jacob )'. Shaniz Co., Limited (1911) 23 0. L. R. 544 a by-law passed for this purpose was the means adopted. The company relied on s. 45 of the Act, which says that shares slijill Iw transferable in such manner and sub- '^'-^I DOMINION OOMrANlES \CT. Sects. joct to siu'li conditions ;iii(] restrictions as are pre- ^^-^^-^- scribed by Part 1 of the Act or by tlie letters patent or Uostrii-tions tlic by-laws of the com])any. Tt was held, however, on tiausfer. jj^.^^ ^^j^.j^ .^ i^^..].,^^, ^^..^„ invalid and that the above sec- tion nmst be read in cbnjnnction with the sections re- hitini>" to the transfer of shares and sections 80 and 81 dealini>' with the powers of directors. Moss, C.J.O., at pag-e 548, stated the result of these sections in the following- words: "Nothing in these matters indicates the assertion of a power to prevent the transfer except by consent of the directors, in any case in which the Act has not expressly authorized it. Forms of trans- fers, and certificates and records of transfers, there nmst be, in order to ensure accuracy and ease in trac- ing the title of shares transferred from time to time; and such necessary conditions and restrictions as the attainment of that object calls for are reasonable and fair. In these ways the by-laws may regulate the transfer of stock without at all interfering with or hampering its ready saleability. These are provisions which regulate, in the true sense of the word, the trans- fer of stock; and the power given by the Act extends no further. When sections 45 and 80 are read together, it seems plain that the by-laws of the company spoken of in section 45 mean those relating to transfer of stock which sec. 85 authorizes, and these are limited to regulation." This case has recently been approved by the Judicial Committee of the Privy Council in Can- ada National, Sc. Co. v. Ilutcliings (1918) 87 L. J. Ch. 106, a case decided in reference to a company incor- porated under Part II. In Re Belleville Driving and Athletic Association (1914) 31 0. L. R. 79, an agreement had been entered into by the incorporators before the issue of the letters patent to the effect that no shares should be transferred without the consent of the sharehold- ers; a similar agreement it was alleged had been entered into between the shareholders and the com- pany and by eaeli shareholder with the others. It was. held that such agreements did not attach to the shares the incident of non-transferability without the TRANSFER OF SHARES. 327 consent of all the shareholders and that the only Sects, remedy for a breach of such an agreement was an 64-68a. action for damages, or, possibly, an injunction to re- Restrictions strain a threatened breach. The distinction between "^^ ^'■^nsfer. a restriction imposed by agreement and one appearing in the articles of association of the company which has been held in English cases to be valid is explained by ]\[eredith, C.J.O., at pp. 85 and 86 of the report as follows : "In the latter case the agreement forms part of the very constitution of the company, and every one who deals with the company or with respect to shares in it has an opportunity of examining it, while in the former it is a collateral agreement and is not embodied in its constitution, and such a person would have no means of knowing of its existence." In Barnard v. Duplessis Independent Shoe Maeltinery Co. (1907) Q. R. 31 S. C. 362 an agreement signed by all the share- holders engaging that before any sale of shares tliej^ should first be offered to certain individuals, was held to be binding only on the shareholders individually. The company being a stranger to the agreement could not enforce it. See also Montgomery v. Mitchell (1907) 18 Man. L. R. 37; Societe Canadienne, So. v. Daveluy (1892) 20 S. C. R. 449; Barnard v. Desautels (1909) Q. R. 19 K. B. 114, 121; Barnard v. Duplessis (1907) Q. R. 31 S. C. 367, 368, 369. It may ])e mentioned that an endorsement on the face of each share certificate of the fact and the exact nature of the restriction against transfer, would answer tlie practical objection urged above against a secret clog on transferability. Possibly, notice so conveyed would be an effective answer to a transferee claiming registration, at any rate if he had seen the certificates before paying tlie consideration for the transfer to his transferor. Sec (ui the effect of notice McKain v. Canadian Birkbeck Co. (1904) 7 O. T.. R. 241 on wliicli some doubt is cast by Meredith, G.J.O., in Be Belleville Driviny and Athletic Association, supra. Altliough a restriction on the transfer of shares can not be imposed by agreement or l)y-law it can ])e 328 DOMINION OOMPANIES ACT. Sects. effectively done by the inserting' of an appi'opriate 64-68A. provision in the U'tters i^atent themselves, per Mere^ dith, C.J.O., in Be Belleville Driving and Athletic As- sociation (11)14) 31 0. L. R. at p. 86; or if a number of the shareholders desire that their shares should not be transferable they can transfer them to a trustee or to a holding company. In some jurisdictions, e.g., On- tario, and now under the Dominion Act, provision is made for the incorporation of '* private" companies, one of the incidents of which is a restriction on the transfer of their shares. 9. Transfers to escape liability. As has been mentioned above, the consent of the directors is required before shares not fully paid-up can be transferred. If, however, such consent is ob- tained so that the transfer is registered the transferor escapes liability on his shares. It is necessary, however, that the transfer should be an out and out transfer, reserving to the transferor no beneficial right to the shares, and it is necessary further that registration be not obtained by the use of unfair means on the part of the transferor : Discover^ ers' Finance Corporation, Lindlar's Case (1910) 1 Ch. 316 (C, A.). With regard to what constitutes obtain- Use of un- [^gr registration of a transfer by unfair means, fair means. o o j ^ ' Buckley, L.J., in the foregoing case laid down the two following rules: — "The transferor will not escape lia- bility, (1) if he has actively by falsehood, or passively by concealment, induced the directors to pass and regis- ter a transfer (even though it be an out and out trans- fer) which if he had not so deceived or concealed, they would have refused to register. Here again the question is one of fact. It is not sufficient to show that the transferee's address was incorrect, or that the description of his occupation was not accurate, or the like. The Court must arrive at the conclusion that therefrom resulted such a state of things that, if the directors had kno"\vn the truth, they would not have registered the transfer (at p. 321)." TEANSFER OF SHARES. 329 (2) If "the transferor has obtained the advantage Sects, of executing and registering his transfer to a man of 64-68a. straw upon an opportunity obtained by him fraudul- ently in breach of some duty which he owed the cor- poration — as, for instance, if he (being in a position so to do) have procured the postponement of the com- mencement of the winding-up in order to get time to execute and tender such a transfer for registration, or if by collusion with the directors he has procured them in breach of their duty to pass a transfer which they ought not to have passed." (At p. 322). The following further propositions were laid down in Lindlar's Case : — Whether a transfer is out and out is a question of fact; it is immaterial that as between the transferor and transferee there is an obligation on the part of the former to indemnify the latter in whole or in part. Many cases have arisen in which shares issued as Transfer of fully paid-up have left their holders liable for calls. S"i. If the original holder of such shares transferred them as fully paid-up, it is now clearly settled that the shares must, ill llie liands -of the transferee who has pur- chased them without notice of the circumstances under which they were issued, be treated as fully j)aid and the liability on the shares remains in the transferor : British Farmers' Co. (1878) 7 Ch. D. ^33 ; Burki^isharv V. Nicholls (1878) 3 App. Cas. 1004. Where a transfer of bonus shares is made by a director to a transferee wJio becomes entitled to hold them as fully paid-up and so escapes liability to the company as a contributory the director so transferring may be liable to the company for breach of trust under section 83 : Wiarton Beet Root Sugar, Freeman's Case (190G) 12 0. L. R. 149. 10. Ineffectual and invalid transfers. If a shareholder disposes of his shares by an invalid transfer or by means which are legally ineffect- ual to relieve liiin of them, he will i-ciii.-iiii li.iblc in respcft of tlic slijii'cs and this ;iltli()ii,i;h he bo entirely o30 DOAUXION COMPANIES ACT. Sects. iiiiiocoiil ill tlic inaltcr, I'oi- if a person bo once a 64-68a. sliarelioklcr lie will remain a shareholder until he can iiu-nVftiiMi ^liow that he has in some lawful way got rid of his iV-a^fers^'"^ liability: Ad(Iiso)i\s Case (1870) L. K. 5 Ch. 294 at p. 397 ; Bell's Case (1879) 4 App. Cas. 550. A transfer of shares to the eom))any itself for cancellation will not do awav with the liability of the sharelioldor : lie Whinipec) Hedge and Wire Fence Co. Ltd. (1913) 22 ]\lan. L. R. 83 and see Smith v. Gowganda (1911) 44 S. C. R. 621. Where the manager of an insurance company by the authority of the directors purchased from the holder partly paid-up shares on which calls were in arrear for the purpose of cancellation, taking- the transfer to himself as manager *' in trust " and the shares were never cancelled, the dividends thereon being credited to the company, it was held that the manager was properly placed on the list of contribu- tories, the company having no powder to deal in its owii stock and the transferor being ignorant of the illegal purpose: McCord's Case (1891) 21 0. R. 264. In such case the transfer is illegal, but whether liability on the shares is transferred or not depends on tlie knowledge or ignorance of the prior holder, ibid. It should be remembered that a transfer which is made with the object and has the effect of reducing the capital stock of the company, is void, and all reso- lutions of the company and directors, authorizing such transfer, are illegal and ultra vires : Ross v. Worthing- ton (1882) 5 L. N. 140; Ross v. Fiset (1882) 8 Q. L. R. 251 ; and a transfer to a nominee of the company leaves the transferor liable: Addison's Case (1870) L. R. 5 Ch. 294. 11. Effect of informalities and irregularities. A transfer may be valid if bona fide even though made and registered w^ithout formally complying wdth the usual procedure. Where a shareholder who was also a director notified the company that he desired to withdraw and the provisional directors, there being at that stage of the company's organization no TRANSFER OF SHARES. 331 proper register of transfers and no by-laws governing Sects, the same, erased tlie shareholder's name from the 64-68a. company's book, noted the date on which the director retired, and purported to transfer the stock to a per- son who thereafter became president of the company, informaii- all of which was approved by the shareholders — this frrlcX^- transaction was held to be in effect a transfer of the ties. share and a substantial compliance with the act: Re Sprouted Food Co., Hudson's Case (1905) 6 0. W. R. 514. But if there is no transfer in fact of shares and acceptance thereof by the transferee the case is different. In Be Publishers' Syndicate, Paton's Case (1903) 5 0. L. R. 392 the directors of the company erroneously believing that there was no unallotted stock, procured powers of attorney from several per- sons authorizing an agent " to receive from the ven- dors a transfer " of a specified number of " shares in the company purchased by me from him " and " to sign in the books of the company my name and accept- ance to the transfer thereof." No transfer was actually made of the shares by any vendor and appointors who took shares from the company, some of them si^'ning ap])lications and some of thejii not, were, held to be original allottees of the shares and liable as such. 12. Estoppel. Tlie rights of transferors and transferees are fre- quently affected by the law of estoppel as applied to a transaction in wliicli they have been engaged. The following cases ilhistrntc tli(> applicntion of tlie doe- ti'inc on this sul),ject. I'pon the facts diseloscd it was held that a person who liad paid one call after assigning his shares and after the assignment had been accepted and registered by the company was not estopped from proving the assignment as an answer to an action for the second call: Provincial Insurance Co. of Can- ada v. Shaw (ISfiO) 11) U. C. R. 533. Where a trans- fer of shares was made to qunlify the transferee to act as a director, an action by llic 1 raiisferors against Oo2 DOMINION COMPANIES ACT, Sects. the dovisee of tlie transferee to liave it declared that ^^•^^-^- tli(> assin-niueiit was made to the transferee as trustee lor the })laintiffs and for a re-assignment was dismis- sed: Kialy v. t^niiih (1879) 27 Gr. 220. Where a statutory liability which can only attach to an actual legal shareholder in the company is attempted to be enforced against a person, he is not Estoppel. estopi)ed by the mere fact of having received transfers of certificates of stock from questioning the legality of the issue of such stock: Page v. Austin (1882) 10 S. C. R. 132. Although A. had taken a transfer of shares absolute in form and caused it to be entered in the books of the company as an absolute transfer, he was not estopped from proving that the transfer of shares was by wav of mortgage: Paqe v. Austin (1882), 7 A. E. 1, 10 S. C. R. 132. After a winding-up order has been made it is too late for holders of shares entered as such in the books of a bank in liquidation to escape liability by showing irregularities in transfers to their predecessors in title, or in the original issue of the shares : Re Central Bank of Canada, Home Savings and Loan Co. Case (1891) ISA. R. 489. A company is estopped from denying that the per- son to whom a share certificate has been granted is the registered shareholder entitled to the specific shares included in the certificate ; and in case of a bona fide transferee, without notice to the contrary, that the amount certified to be paid has been paid, and this even against the creditors of the company: McCraken V. Mclntyre (1877) 1 S. C. R. 479. Where the defendant at the request of the presi- dent of the company accepted a transfer of shares partly paid-up to enable him to attend a meeting of shareholders and form a quorum, which he did, and gave the president power of attorney to re-transfer shares after the meeting, but no re-transfer was ever made, it was held that he was liable as a contributory : Ontario Investment Co. v. Leys (1893) 23 0. R. 496'. ^ The question has been raised but not settled as to how far the transferee steps into the shoes of the TRANSFER OF SHARES. 333 transferor so as to be bound by all acts (for example Sects. of acquiescence) of his transferor. See Ashhury v. o4-68a. Watson (1885) 30 Cli. D. 376; London Trust Co. v. McKenzie (1893) 62 L. J. Q. B. 870. 13. Form of transfer. Sections 45 and 80 of the Act provide that the form of transfer may be prescribed by the by-laws and in actual practice this is always done, the usual form of by-law being as follows ; — ** A share transfer book shall be provided in such form as the board of directors may approve of, and all transfers of shares in the capital stock of the company shall be made in such book, and shall be signed by the transferor, or by his attorney, duly appointed, in writing, and the said share transfer book shall be kept at the head office of the company, and all transfers of shares shall be registered therein." A usual form of transfer and j^ower of attorney endorsed on the back of the share certificate is as fol- lows : **For value received hereby sell, assign and transfer unto shares [Nos. to ] represented by the within certificate and do hereby irrevocably constitute and appoint attorney to transfer the said shares on the books of the com- pany with full power of substitution in the premises. ''Dated this day of 191 . " In the presence of > > Where a given form of transfer is made compulsory by tlie by-laws it must be followed and the directors sliould refuse to register a transfer not iti proper form. Siii.'ill (l<'\l;ili(>iis, liowever, will not justify the r<'j('cti()n ol" a transf(^r wliicli substantially complies with the regulations. Thus it has been held that the absence of the denoting numbers of the shares (where the shares were required to be distinguished by num- b<'r) and tlio absence rif Hk- address of the transferor, 334 DOMINION COMPANIES ACT. Seots. wore inmiatorial whore both were known to tJie 64-68a. directors and there was no doubt as to the uh'iitity of the shares intended to be transferred : Re Leihchy Form of (liH)9) 1 Oh. 815. The same is true whore the wrong tianster. nuiiibors are inserted in the transfer: Ind's Case (1872) L. R. 7 Ch. 485, or where the numbers are inserted after execution: Bishop's Case (18G9) L. R. 7 Ch. 269 n., provided always that the identity of the shares transferred is clear. If the transfer is executed in blank there is an implied authority to the transferee to complete it: Be Goldfields, Limited (1910) 2 O. W. N. 1373. The absence of a subscribing- witness to the transfer has been held not to be fatal, ibid. It there is no by-law regulating the form, a transfer in the ordinaary form endorsed on the certificate issued will be sufficient, ibid. Where the company had never delivered the certir ficate in respect of his shares to the shareholder it was held by MacMalix)n, J., in Meyer v. Lucknow Elevator Co. (1905) 6 O. W. R. 291 that an assignment of his stock by the shareholder was a transfer of his certi- ficate in the hands of the company. It was not neces- sary for the shareholder to go through the formality of obtaining possession of the certificate and handing it to the purchaser. 14. Remedies for refusal to register transfer. A company owes a duty to a shareholder to per- mit the transfer of his shares and in case of a wrong- ful refusal to permit a transfer is liable for the natural consequences of such breach : Wolverton v. Black Dia- mond Oil Fields (1915) 8 Alta. L. R. 283. Suit. Where a company wrongfully refuses to register a transfer the transferee may sue in equity for a decree compelling the company to register a transfer, but such a decree is not to be made in the face of superior equities, or where there has been laches : Smith v. Bank of IS' ova Scotia (1882) 8 S. C. R. 558. Mandamus. In Ontario and Quebec mandamus will lie at the instance of a transferee of shares to compel the TEAXSFER OF SHARES. 335 company to make the transfer on its books : Goochvin Sects. V. Ottawa and Prescott By. Co. (1862) 22 U. C. R. 64-68a. 186; Re Guillot S Sandwich and Windsor Gravel Road Co. (1867) 26 U. C. R. 246; Re Macdonald S Mail yi^.^aamus, Printing and Publishing Co. (1876) 6 P. R. 309; Smith V. Canada Car Co. (1876) 6 P. R. 107; Crawford V. Provincial Insurance Co. (1859) 8 C. P. 263; Cunningham v. Beaudet (1878) 11 Q. L. R. 168; Mac- donuld V. Montreal and New York Ry. Co. (1856) 6 L. C. R. 232; Brady x. Stewart (1887) 15 S. C. R. 82; Upton V. Hutchinson (1899) 2 Que. P. R. 300; R. J. 8 Q. B. 505; Queen v. Clements (1891) 24 N. S. 64; Rich V. Melanchton Board of Health (1912) 26 0. L. R. 48. Laches will disentitle a transferee from demanding this remedy : Leadley v. Union Stock Yards (1915) 8 0. W. X. 5i6. A distinct refusal to register the transfer is neces- sary before mandamus will lie, but a refusal in effect though not in direct terms would be sufficient. No rule can be laid down for determining whether there has been a refusal or not : Re Guillot S Sanchvich and Windsor Gravel Road Co. (1867) 26 U. C. R. 246; Goodwin V. Ottawa and Prescott Ry. Co. (1863) 13 C. P. 254. The transferee may also sue for damages for wrong- Suit. ful refusal to register his transfer: McMurrich v. Bondhead Harbour Co. (1852) 9 U. C. R. 333; Wolver- ton V. Black Diamond Oil Fields (1915) 8 Alta. L. R. 283. The writ must be directed against the company and not against the directors or an officer personally: ('unni)ighani v. licaiidet, supra; Queen v. Clements, supra; Upton v. Hutchinson, supra; but see Morton v. Cowan (1894) 25 O. R. 529. There is no i)i-ovision in tlir present Dominion act permitting a summary motion to rectify the register though this remedy is antlioii/cd l)y the acts of a number of the proyinces. TIm' measure of damages for refusal to register M»>as.irc mav he tiie yalue oi the shares at the tmie or tlie f,,,- rofusai of refusal, see In re Ottos Kopje Diamond Mines (1893) ';;^;^ ^"^ )36 DOMINION COMPAMIES ACT. Sects. 1 Ch. 618; McManlch v. Bondhcad Harbour Co. 6^-68a. (1859) 9 U. C. li. 333. Whore the shareholder is suing, the company is liabk* i'or the natural consequences of the breach oi' duty to i)ermit the transfer, which, in a case where a sale of shares is prevented, is the loss of the sale: Wolverton v. Black Diamond Oil Fields (1915) 8 Alia. L. E. 283. 15. Sale of shares. Contractual relation of transferor and transferee. A vendor unless the contract fixes the time for the delivery of the shares must deliver them within a reasonable time, and where unreasonable delay occurs the purchaser may refuse to accept the shares : Be . Waal V. Adler (1887) 12 App. Cas. 141. But if the })rice be payable by instalments the vendor need not transfer till payment in full: Saunders v. Harvey (1912) Que. 43 S. C. 54. The agreement for sale of shares does not impliedly bind the vendor to procure the registration of the transfer. His duty is performed when he hands over to the transferee the duly executed transfer together with the certificate or its equivalent : SJdnner v.^City of London (1885) 14 Q. B. D. 882; London Founders' Association (1888) 20 Q. B. D. 576, followed in Castleman v. Waghorn (1907-8) 7 W. L. R. 412. The transferor, however, is under an im- plied obligation not to prevent or delay registration of the transfer: Hooper v. Herts (1906) 1 Ch. 549; Boultbee v. Wills (1911) 15 0. L. R. 227. In jurisdictions where a government transfer tax is payable by the transferor, he must afifix the revenue stamps or otherwise provide for payment of the tax. For a case in which the plaintiff in an action for damages for non-delivery of shares failed because the company never became fully organized, see Roche v. Johnson (1916) 53 S. C. R. 'l8 reversing (1915) 24 D. L. R. 305. On the sale of shares where the certificate did not state that the shares were fully paid and in fact there still remained a liability of sixty per cent, thereon, the transferee was held entitled to compel his transferor TRANSFER OF SHARES. 337 to pay up the balance of sixty per cent, on the company Sects, refusing to register him as the holder of fully paid 64-68a. shares: Baauchemin v. Richelieu (1908) Q. R. 34 S. C. 261, sed queer e in Ontario. Specific performance of an agreement to sell shares gale of may be granted, and the company may, be joined as stares. a proper party: Reardon v. Franklin (1917) 35 D. L. E. 380; 51 N. S. R. 161, affirmed (1918) 55 S. C. R. 613. The appropriate remedy for breach of agreement to transfer is damages, where other shares might have been purchased on the market; the transferee is not entitled to have the transferor declared a trustee of the shares for him: Bureau v. Laurencelle (1913) 11 D. L. R. 283. This case may seem inconsistent with Stevenson v. Wilson (1907) Sc. Ct. Sess. 4-45, where it was held that the company having refused to register the transferee while the latter retained the beneficial interest in the shares, the transferor must take the dividends as trustee for the transferee and pay them over to him, but Bureau v. Laurencelle was a case of shares whicli were being dealt with on the stock market and which had an assignable money value and there- fore it was a case where the purchaser could be ade- quately compensated in damages. laser Where a purchaser refuses to accept shares, thepyj.j.}j^ vendor ca?) liavc (hmiages or specific performance : refusingr to Hehvifi V. Siemon (1916) 10 0. W. N. 296; McGregor^''''^^^' v. Curric (1914) 31 0. L. R. 261, affirmed by Privy Council, December 14, 1915; David v. Dow (1916) 27 D. L. R. 689. Tn an action for the price of shares, it has been lichl ill Quebec that it is not a ground for a dilatory excei)tion asking for a stay of tlie action, that the plaintiff lias not tendered the shares either before or with tlie action: Ahitihi Power v. Smart (1914:) 20 D. L. R. 977. Specific performance of a contract for the purchase of shares will not be decreed where the directors, hav- ing the power to do so, refuse to assent to the transfer, n.c.A.— 22 338 DOMINION COMPANIES ACT. Sects, 64-68A. Sale of shares. Measure of damages. SO that the transferee named cannot be put on tlie rei>-ister, unless it is a case in wliich the court can and will compel their assent: Birminqham v. Sheridan (18G4) 33 Beav. 660. In Quebec in a case where there was an agreement to transfer sjiares the company refused to accept a purchaser as transferee, and the vendor thereupon refused to carry out the agreement. The purchaser brought an action for paid-up shares, or their e(|niv- alent in cash. It was held that he was only entitled to the shares as they stood, and as the company refused to transfer the agreement was at an end: O'Brien y. Weaver (1880) 3 L. N. 111. Bed qucere, whether on the question of recovery of damages this decision is not at variance with the jurib'- prudence of the provinces other than Quebec. Where the articles of association of a company required that before the sale of certain shares they should first be offered to the board of directors, an objection by an oufside purchaser to complete the purchase by reason of non-compliance by the vendor with such article fails if notice that the shares were for sale was given to the individual directors and the latter took no action towards exercising the right to purchase the shares : Harvey v. Mitchell (1914) 20 D. L. R. 134. The measure of damages for breach of the obligation of the transferor not to prevent or deLpy registration was held in Hooper v. Herts (1906) 1 Ch. 549 to be the difference between the price at which the purchaser had contracted to resell and the price he afterwards obtained when registered as owner. When the number of shares in question is large it may not be possible to fix the damages absolutely as the difference between the value of the shares at the proper time of registration and their value when the transferee finally got control of them; other considerations may be involved such as the state of the market, the nature of the shares &c., as to which see Hooper v. Herts, supra at p. 562. TRANSFER OF SHARES. 339 In a contract for the sale of shares the measure of Sects, damages for breach by reason of failure of the seller 64-68a. to deliver or failure of the buyer to take the shares is the difference between the contract price and the market price at the date of the breach: Rodocanachi Sons S Co. V. MUhurn (1886) 18 Q. B. D. 67 ; Jamal v. Moolla Datvood Sons £ Co. (1916) 85 L. J. P. C. 29. As to the basis on which damages for non-delivery will be assessed where there is no evidence available of the company's shares having a market value, see JoJin- son v. Roche (1915) 24 D. L. R. 305, reversed on other grounds (1916) 53 S. C. R. 18. On default by the purchaser there is an obligation by the vendor to minimize the damages by getting tlie best price he can at the date of the breach. He is not bound, however, to reduce the damages by subsequent sales at better prices. If the vendor chooses to retain the shares after the breach he is not liable to the purchaser for profits if the market rises and he can not make the purchaser account for subsequent losses if the market falls, ihid. Upon a sale of shares there is ah implied contract on the part of the buyer to indemnify the seller from any calls or liabilities which may arise in respect of the shares subsequently to the transfer; Kellock v. Enthoven (1874) L. r'. 9 Q. B. 241; Levi v. Ayers (1878) 3 App. Gas. 842. . It is a common transaction for the holders of the Saio of majority of the issued shares of a company to sell j^si"!""*"^^*' their sliarcs to a purchaser who desires to obtain shares. the conti'olling interest in the comi)any. In such cases it would be prudent, where possible, to obtain on the ti-ansfcr a gcnci'al release from the purchaser of all claims against tlie existing directors, where any of these are ti-jinsl'erors. See Aninionia Soda (U). v. CIkiiii- herlain (1918) 87 L. J. Cli. 193; (1918) 1 Oh. 266. 16. Conflicting claims to shares before registration. If notice of an objection on the |);irt of the trans- feror to registration of Hie transferee conies to the 340 DOMINION COMPANIES ACT. Sects. knowledge of the eoiupaii}-, the directors are not 64-68a. bound to registei- the transfer forthwith, even though ~ the transfer is in order: IrcUiud v. Hart (1902) 1 Ch. 552. The directors are entitled to a reasonable time to make (Muniiries, ih'id. What is a reasonable time, is of course a question of fact. In Nelles v. Windsor Essex (Nid Lake SJiore die. Ry. (1908) 16 0. L. R. 359 Britton, J., tliought that two or three days was a suffi- cient time and on the application of the transferee made an interlocutory order directing a mandamus to issue. The Divisional Court however set the order aside, holding that there was not sufficient urgency sho^\m as to call for summary action, and that the ques- tion of unreasonable delay could be better disposed of on viva voce evidence at the trial. While, then, man- damus may not be obtainable on an interlocutory mo- tion, mandamus is the projjer remedy where the directors refuse to register the transfer: Re Poison Iron Works (1912), 3 0. W. N. 1269 at p. 1271. In the event of conflicting claims being set up to the shares by the transferor and transferee before registration and an action being brought the company should interplead: Re Underfeed Stoker Co., of America (1901) 1 0. L. R. 42. A special procedure is provided for by s. 101 of the act for determining the ownership of shares in certain cases but this section does not apply to ordin- ary transfers of shares. 17. Shares held in trust — Rights of transferees. (j)uestions may arise as to the right of a transferee of shares from a trustee, to hold them against the cestui que trust. If tlie certificate shows on its face that the shares are held in trust the transferee is put on inquiry and is affected with notice that the trans- feror is not the owner of the shares : Birkheck Loan v. Johnston (1901) 3 0. L. R. 497, 6 O. L. R. 258; London dH: Canadian Loan and Agency Co. v. Duygan (1893) A. C. 506, at p. 509. If, however, the trust is not clearly disclosed on the face of the certificate, the transferee is TRANSFER OF SHARES. 341 not in the absence of actual knowledge affected by the Sects, trust. Thus in London & Canadian Loan and Agency 64-68a. Co. V. Duggan, supra, where the certificate was made ^shares held out to the ''manager in trust" of a bank, that indicated i^ trust. merely that he held the shares in trust for his em- ployers, and did not indicate a trust in favor of some third person so as to affect a transferee with notice of such relationship. Where a certificate is endorsed in blank, the holder improperly depositing the certificate as seciTrity for advances, may confer on another a valid title against the owner: Smith v. Rogers (1899) 30 0, R. 256; but where it is not an ordinary endorse- ment in blank there may be notice of the restricted use which the holder of the certificate may make of it: Mathers v. Rogal Bank (1913) 29 0. L. R. 141. 18. Loans on the security of shares. It is a common commercial practice to make loans upon the security of shares and the security may be taken in various ways. The borrower may deposit the shares with the lender endorsed in blank, the lender to retain possession of the certificates until the loan is repaid. As share certificates are not negotiable in- struments and the title of the lender is not complete until registration he runs the risk of having his secur- ity defeated by the prior registration of a subsequent transfer, see supra at p. 315. The lender's security may also become impaired if he has not got himself regis- tered as a sliareliolder by the fact of the ])orro\ving shareholder being indebted to the conii)any; the com- pany may refuse to permit a transfei- of the shares into the lender's name, s. G7, or retain dividends on the shares to meet lialVdity for calls oi- indebtedness, s. 71. The deposit of share cei-tificates to secure a loan amounts to an agreement to transfer the shares by way of mortgage. Tlic depositee is entitled to a de- cree of foreclosure and is not restricted to a remedy l)y sa\o.:Ifnrrold v. Plnifg (1001) 2 Di. 314. Tlif practice of taking .•iiid i-cgistering a transfer of Transfer shares to tlic lender "in trust" is likewise dangerous. :U2 DOMINION COMPANIES ACT. Se3ts. 64-68 A. Loans on security of sliares. The leiulor should I'ollow one of two courses, li' iliG shares are not paid ii]) lie should take a charge, and give notice to the company; if the shares are fully paid he should take a transfer: Wilson v. British Co- lumbia Repninci Co. (1912) 22 D. L. R. 634, 638. If the company registers the transfer to the lenders of fully paid shares, it loses its lien for any indebtedness of the prior shareholders : ibid., at p. 643 and cases cited. By taking an out and out transfer to himself or his nominee followed by registration the lender obtains absolute title to the shares to the extent of his ad- vances. Where this was done and the lender acted in good faith, taking a transfer from brokers who were fraudulently pledging the shares of their client to secure their own account the lender was entitled to hold the shares as against the brokers' client: Fuller V. Glyn Mills, Currie S Co. (1914) 2 K. B. 168. In that case it was also held that the lender was not put on enquiry by the mere fact of the brokers ' depositing the shares to secure their own indebtedness, nor by the fact that the shares deposited were made out in the name of another party and by him endorsed in blank. If the endorsement is restricted or not ''in order" and indicates that only a portion of the shares represented by the certificate are to be used and that the shares are to be sold and not pledged, the lender will be affected with notice and can not retain the certificate : Mathers V. Roi^al Bank of Canada (1913) 29 0. L. R. 141. There is no custom or usage of banks or brokers or of the stock exchange justifying the deletion of such restric- tive words, ibid. Where a mortgagee of shares has agreed to vote the shares in accordance with the wishes of the mort- gagor the Court will enforce such an agreement by mandatory injunction: Puddephat v. Leith (1916) 85 L. J. Ch. i85. Lender's power of sale. Even in the absence of an express power of sale the mortgagee of shares has an implied power to sell on default of payment at the appointed time, or, if no time be fixed, then on the expiration of a reasonable notice TRANSFER OF SHARES. 343 claiming- payment on a certain date : Deverges v. Sects. Sandeman (1902) 1 Cli. 579. A month's notice or less 64-68a. would probably be regarded as reasonable, per Stir- Loans on ling and Cozens Hardy, L.JJ., ibid. As to tlie manner ^Ees^^ "^ in which the sale should take place, that depends on tlie law of each particular province. In an Ontario case : Toronto General Trusts v. Central Ontario Ry. (1905) 10 0. L. R. 347, the memorandum of hypothecation authorized the pledgee of bonds, on default, from time to time to sell the securities by giving fifteen days' notice in a daily paper published in Ottawa, with power to buy in and re-sell without being liable for any loss. On the facts it was held that the sale was invalid, and at p. 353 of the report it was said that the sale should be by public auction. Furthermore a sale of securities pledged should be only for a sufficient amount to pay off the debt, ibid. In a Quebec case it was held that a public sale duly advertised was necessary, and notice given by private circular to the shareholders was deemed insufficient: Campbell v. Beyer (1906) Que. 30 8. C. 8G. See also Grice v. Bartram (1912) 3 0. W. N. 1312. If there is a special agreement pledging the shares the rights of the lender and borrower inter se will, of course, be governed there'by. A mortgagee of shares with a power of sale is not a trustee of the power, which is ratlier a power given him for his own benefit, per Maclennan, J. A., in Daniels v. Noxon (1889) 17 A. R. 206, at p. 211, citing Warner v. Jacob (1882) 20 Cli. D. 224. Consequently, there is no duty on him to sue a purcliaser of the shares for com- pletion of tlie sale, and he can not be compelled by the mortgagor to do so except on the terms of the debt being paid, ibid. 19. Loan of shares. Wiiere shares are lent among stockbrokers the bor- rower is not bound to return llu; specific shares borrowed, but may repay the loan with any shares of the same nmmmt and kind. Tii snch iransactions the 344 DOMINION COMPANIES ACT. Sects. borrower has the right to return tlie shares at any time 6'^-^8a. and tleniand the i-etnrn to him by the lender of the security given for the loan of the shares. In the event of refusal by the lender to take back the shares the bor- rower need not make a formal tender thereof : Wills v. Ford and Doucette (1915) 35 0. L. R. 126 (App. Div.). 20. Transfer practice. The following are some of the points which com- monly arise to be dealt with by the secretary or the transfer ofificer of the transfer agent and registrar of a company. (1) Genuineness of signature. The company is bound not to take an existing shareholder off the register unless he has executed a transfer. If it acts on a forged transfer it is liable to the shareholder in damages or may have to go into the market and buy other shares to replace those im- properly transferred. The company may as a precau- tion advise the registered holder of the transfer, but the protection derived from this practice is apt to be illusory: Sheffield Corporation v. Barclay (1905) A. C. 392, at p. 399. It is a more useful precaution to re- quire the person presenting the transfer to procure the endorsement to be guaranteed by a bank or by a firm of stockbrokers on a recognized stock exchange. The company is entitled to be indemnified by the person at whose request a forged transfer is registered for any loss resulting therefrom: Bank of England v. Cutler (1908) 2 K. B. 208; Sheffield Corporation v. Barclay, supra. In the last mentioned case Lord Davey, at p. 399, stated the liability of the person pre- senting a transfer for registration as follows: ''Where a person invested with a statutory or common law duty of a ministerial character is called upon to exercise that duty on the request, direction or demand of another (it does not seem to me to matter which word you use) and without any default on his own part acts in a man- ner wliich is apparently legal, but is in fact illegal and a breach of duty, and thereby incurs a liability to third TRANSFER OF SHARES. 345 parties, there is implied by law a contract by the person Sects. makino- the request to keep indemnified the person 64-68a. having the duty against any liability which may result Transfer from such exercise of the supposed duty." practice. The company's duty is towards the shareholder and not towards the person presenting the transfer for registration, ibid. Subsequent transfers following on a void transfer can not be cancelled when the subsequent transferees acquire the shares bona fide and are not involved in the fraud, ibid. (2) Regularity of endorsement. The signature should correspond exactly with the name on the face of the certificate. Most forms of en- dorsement printed on the back of the certificate call for the Avitnessing of the signature of the transferor, but the absence of a subscribing witness is not fatal : Re Gold fields and Harris Maxwell (1910-11) 2 0. W. N. 1373. (3) Change of name. In the case of the marriage of a female shareholder and consequent change of name, a statutory declaration should be required setting out tlie facts and showing that the names on the face of the certificate and in the endorsement are those of the same person. As shares are personal estate and are governed by the law of the shareholder's domicile it is inii)ortant to obtain the concurrence of the husband in tiie transfer of shares by a female married shareholder domiciled in a jurisdiction, e.g., the Province of (Quebec, wiicic such concurrence may be requisite, or wiiere I lie domicile of the shareholder is in douljt, to obtain a de- claration covering the matter. (4) Transfers by executors (uid administrators. Production of tlie original pi()l)ate or letters of administration or a (hily certified copy sliould be re- quired, but tlie company need not examine the will to ascertain whether it confers authority to transfer the 346 DOMINION COMPANIES ACT. Sects. shares: Barton v. North Staff' ordsJiire Railway Co. 6^ -68a. (1888) 38 Ch. D. 458. By production of the probate the Transfer Company acquires notice only of the names and ad- praptice. . clrcsscs of the executors and is not entitled to assume ■ that a transfer by the executors involves a breach of trust: Grmidy v. Briggs (1910) 1 Ch. 444. The com- pany is entitled to rely on s. 68 of the Act. If there is more than one executor or administrator all should concur in the transfer. Under the Imperial Act of 1908, s. 29, corresponding to s. 68 of the Do- minion Act, a transfer by one of two executors not registered as shareholders may be sufficient. But see s. 3 (d) of the Act. If the company registers a transfer made by a per- son who is not the executor the true executor will be entitled to have the. share register rectified and to re- cover from the company any dividends which may have been paid to the transferee : Stuart v. Hamilton Jockey Club (1910) 2 0. W. N. 673, 1402; and where the transfer on the face of it shows that the transferor has no authority to deal with the shares the company may not be able to rely on it in order to make the party propounding the transfer liable as warranting its genuineness. Ibid., at p. 1404. In the case of transfers by foreign executors or administrators the taking out of ancillary letters pro- bate or ancillary administration, or the re-sealing of the iDrobate or letters of administration in the province where the head office of the company is situated must be exacted : A. G. v. N. Y. Breweries (1898) 1 Q. B. 205 ; (1899) A. C. 62. It is furthermore necessary in such cases for the company to require proof of compliance with the provisions of the Succession Duty Act of the province in which the register of the company is situ- ated. In most provinces such acts forbid the registra- tion of transfers by foreign executors unless succession duty has been paid or a bond given to secure payment thereof. If no succession duty is payable the executors or administrators should furnish the company with a letter from the Provincial Treasurer to that effect. TKANSFER OF SHAEES. 347 "\Aliere the head office and works of a Canadian com- Sects, pany are in the Province of Ontario the shares have a ^^'^^^- local situs in that province and if ancillary letters of Transfer administration have been taken out the legal title to p^^^'^'^^- the shares is in the Ontario administrators. It follows that a claim disputing the title of the administrators must be determined by the Ontario Courts : Re Fenwick (1915-16) 35 0. L. R 29. In the case of banks, the situs of shares is in the province where the share registry office at which de- cedent was registered is established, and not where the head office is situated: Smith v. Provincial Treas- urers for Nova Scotia and Quebec (1919) 58 S. C. R. 570. In the event of an executor withdrawing his signa- ture to a transfer, without giving any specific reason for so doing, the proper practice was stated by Eve, J., in Grundy v. Brir/gs (1910) 1 Ch. 444, at p. 449, to be to notify the executors that '* unless within a limited time, and a strictly limited time, he took legal proceedings to prevent the company from proceeding to register the transfer, the company would, at the expiration of the time, register the transfer so lodged with them." (5) Transfers to and by partnership firms. It has been held under the Imperial Companies (Consolidation) Act, 1908, that a company is not bound to enter the name of a partnership firm on the register of members, on the ground that a partnership is not a ''person" (being neither a natural person nor a legal entity) and therefore could not under s. 32 of that Act insist that the register be rectified by entering the names of the partners thereon: Var/liano Anthracite Collieries, Limited (1910) 79 I.. J. Cli. 7()9. Section 5 of tlie Dominion Act seems to contemplate "persons" as constituting the shareliolders, and s. S!), whicli deals with the books requii'ed to be kept by the company, also refers to ''persons." Accordingly, it would appear that the Vagliano Case is applicable under our Act. Tlie existing practice, however, is to register partnership firms in the name of the firm, and IU8 DOMINION COMPANIES ACT. Sects. \\iioro this is done it is n ])ropor precaution to obtain 64-68A. from the firm, for use wlien the shares are transferred Transfer by it, a specimen signature in the following form : — practice. Limited." Toronto. date. "We beg to advise you that the members of the firm of authorized to transfer shares and securities standing in the name of the firm, are as below stated, and will sign the firm name as follows : — Member of firm. Facsimile of firm signature.^ will sign But any transfer ought to be signed by each indi- vidual partner in his own name unless the business of the partnership is to deal in shares. Where a firm has been actually registered as a shareholder it has been held that it may be liable as a contributory in a winding-up : Land Credit Co. of Ire- land, Weikersheim S Co.'s Case (1873) L. R. 8 Ch. 831. (6) Custody of certificates after transfer. A certificate after transfer should be cancelled and a new certificate issued to the transferee ; and if all the shares comprised in the certificate are not transferred a fresh certificate for tlie balance is issued to the transferor. The company, however, is under no liabi- lity to the public at large for the safe custody of certifi- cates for shares in its capital stock, and where a com- pany by mistake returned a certificate, after transfer, to the transferor, whereby the latter was enabled fraudulently to raise money on the security of the shares the person defrauded was held not entitled to recover from the company for the loss sustained: hangman Y. Hath Electric Tramivays (1905) 1 Ch. 646. (7) Transfers executed under power of attorney. Wliere the transfer is not signed by the shareholder himself but by some one as attorney for him the origi- TRANSPEB OF SHARES. 349 iial power of attorney must be left with the transfer Sects, and retained by the company. 64-68a. (8) Requirements of registrar and transfer agent. Where the company's shares are extensively dealt Transfer in or are listed on a stock exchange, a transfer agent p^'^^^^^^'^^- and registrar, commonly a trust company, should be appointed to keep the register and record transfers of shares. The following is the usual list of requirements of a trust company, in order to enable it to ])erform its duties as registrar and transfer agent. - 1. Certified copy of charter. 2. Certified copy of general working by-laws. 3. Certified copy of minutes of meeting of share- holders at w^liich directors were appointed. 4. Certified copy of minutes of meeting of directors at which officers were appointed. 5. Certified copy of resolution appointing the trust company registrar and transfer agent. 6. Certified list of shareholders (if any). 7. Specimen signatui-es of officers with power to sig-n share certificates. 8. Certificates from a solicitor that the company has been duly organized, that it owns certain assets and that the shares issued to date linve been properly issued. 1) Corporate seal. 10 In the case of an Ontario eoiiij)aiiy which is sub- ject to Part VI II of The Ontario Comi)anies Act, evidence that the company has obtained a certificate from tJie Provincial Secretary entitling it to commence business. Borrowing Powers. 69. If Jiiithorizf'd l»y liy-l;i\v, saiictionod l.y a vole of nol ,\„f|„„.jty les.s lluii) two-thiifls in value of the svib.«;pribe(l stock of the com- ' pany rfprcscntod at a general nipetiii^ duly called for con.sider- iiif? Ilif liy-law, the director.'^ may from time to time, — in) l)orr()\v money upon the credit of the company; I'.onowinn. (6) limit or increase the amount to be borrowed; Amount. 350 DOMINION COMPANIES ACT. Sect. 69. Issue of boiiils. llyiKitlio- fiition. Limitation :is to bills and notes. Perpetual debenture. Power to re-issue redeemed debentures in certain eases. Transfer from nominee of company. When debentures deposited not reder-med. Re-issue of debentures. (c) issue bonds, debentures, debenture stock or other securi- ties of the company, and pledge or sell the same for such sums and at such prices as may be deemed expedient; (d) hypothecate, mortgage or ph'dge the real or personal property of the company, or both, to secure tiny such bonds, debentures, debenture stock or other securities, and any money borrowed for tlie })urposes of the company. 2. Nothing in this section contained shall limit or restrict the borrowing of money by the company on bills of exchange or promissory notes made, drawn, accepted or endorsed by or on behalf of the company. 3. A condition contained in any debentures or in any deed for securing any del)cntures, whether issued or executed before or after the passing of this Act shall not be invalid by reason only that thereby the debentures are made irredeemable or re- deemable only on tlie happening of a contingency, however remote, or on the expiration of a period, however long, any rule of equity to the contrary notwithstanding. 4. Where a company has redeemed any debentures previ- ously issued, the company, unless the conditions of issue ex- pressly otherwise provide, or unless the debentures have been redeemed in pursuance of any obligation on the company so to do (not being an obligation enforceable only by the person to whom the redeemed debentures were i^^sued or his assigns), shall have power to keep the debentures alive for the purposes of re-issue, and where a company has purported to exercise such a power the company shall have power to re-issue the defben- tures either by re-issuing the same debentures or by issuing other debentures in their place, and upon such a re-issue the person entitled to the debentures shall have the same rights and priorities as if the debentures had not previously been issued ; (a) where with the object of keeping debentures alive for the purpose of re-issue they have, either befor.e or after the passing of this Act, been transferred to a nominee of the company, a transfer from, that nominee shall be deemed to be a re-issue for the purposes of this section ; (b) where a company has, either before or after the passing of this Act, deposited any of its debentures to secure advances from time to time on current account or other- wise, the debentures shall not be deemed to have been redeemed by reason only of the account of the company) having ceased to be in debit whilst the debentures re- mained so deposited ; (c) the re-issue- of a debenture or the issue of another debenture in its place under the power by this section given to, or deemed to have been possessed by, a com- pany, whether the re-issue or issue was made before or after the passing of this Act, shall not be treated as the BOEEOWING. 351 issue of a new debenture for the purposes of any provision Sect. 69. limiting the amount or number of debentures to be.— issued ; (d) nothing in this section shall prejudice, — • fending (i) the operation of any judgment or order of a court procwhiigs ^ ' „ ^,,..,^,'1'=' T T , not affected, of competent jurisdiction pronounced or made not later than ninety days after the passing of this Act as between the parties to the proceedings in which the judgment was pronounced or the order made, and any appeal from any such judgment or order shall be decided as if this Act had not been passed ; or, (ii) any power to issue debentures in the place of any debentures paid off or otherwise satisfied or extin- guished, reserved to a company by its debentures or the securities for the same. 4-5 Geo. V., 1914, c. 23, s. 3. Information as to Mortgages, Charges, etc. 69a. (1) Every mortgage or charge created after the first Registration day of January, nineteen hundred and eighteen, by a company, ff mortgages being either, — {a) a anortgage or cliarge for the purpose of securing any issue of debentures; or, (&) a mortgage or charge on uncalled share capital of the company; or, (c) a floating charge on the undertaking -or property of the company; shall, so far as any security on the company's property or undertaking is thereby conferred, be void against the liquida- tor and any creditor of the company, unless the prescribed particulars of the mortgage or charge, together with an original of the instrument (if any) by which the mortgage or charge is created or evidenced, are delivered to or received by the Secre- tary of State of Canada, for registration in manner required by this Act, within tbirty days after the date of its creation, but without prejudice to any contract or obligation for repayment of the money thereby secured ; and when a mortgage or charge be- comes void under this section the money secured thereby shall immediately become payable: Provided that, — (i) in tbe case of a mortgage or charge created out of Canada comprising solely property situate outside Can- ada, the delivery to and the receipt by the Secretary of State of Canada of a copy of the instnimont by whirli the mortgage or charge is created or evidenced, verified in the prescribed manner, shall have the same effect for the purposes of this section as the delivery and receipt of the instrument itself, and thirty days after the da If on which the instrument or copy could, in due course of post, and if despatched with due diligence, have been received in Canada, shall be substituted for thirty days 352 DOMINION COMPANIES ACT. Sect. 69a. al'U'r lln' di\\v of the (.■rcatioii oi' llu' luurlgage or cliargc, as llic lime within which the particulars and instrument or copy are to he deliveretl to the Secretary of State of Ciinadn ; and, (ii) where tlie niortii'age or charges is ei'eated in Canada, tnit comprises property outside Canada, the instrument creating or purporting to create the mortgage or charge may be sent for registration notwithstanding that fur- ther proceedings may be necessary to make the mortgage ov charge valid or effectual according to the law of the country in which the property is situate; and, (iii) the holding of debentures entitling the liolder to a cliarge on land shall not be deemed to be an interest in land. (2) Tlie Secretary of State of Canada shall kee]), with respect to each company, a register in the prescribed form of all the mortgages and charges created by the company after the first day of January, nineteen hundred and eighteen, and requiring registration under this section, and shall, on payment of the prescribed fee, enter in the register, with respect to every such mortgage or charge, the date of creation, the amount secured by it, short particulars of the property mortgaged or charged, and the names of the mortgagees or persons entitled to the charge. (3) Where a series of debentures containing, or giving by reference to any other instrument, any charge to tlie benefit of which the tlebenture holders of that series are entitled pa7-i passu, is created by a company, it shall be sufficient if there are de- livered to or received by the Secretary of State of Canada with- in thirty days after the execution of the deed containing the charge, or, if there is no such deed, after the execution of any debentures of the series, the following particulars: — (a) the total amount secured by the whole series; and, (6) the dates of the resolutions authorizing the issue of the series and the date of the covering deed, if any, by which the security is created or defined; and, (c) a general description of the property charged; and, (d) the names of the trustees, if any, for the debenture holders ; together with the deed containing the charge, oj' if there is no such deed, one of the debentures of the series ; and the Secretary of State of Canada shall, on payment of the prescribed fee, enter those particulars in the register : Provided that, where more than one issue is made of debentures in the series, there shall be sent to the Secretary of State of Canada for entry in the register particulars of the date and amount of each issue, but an omission to do this shall not affect the validity of the debentures issued. (4) Where any commission, allowance, or discount has been paid or made either directly or indirectly by the company BORROWING. 353 to an}' person in consideration of his subscribing or agreeing to Sect. 69a. subscribe, whether absohitely or conditionally, for any deben tures of the company, or procuring or agreeing to procure subscriptions, whether absolute or conditional, for any such debentures, the particulars required to be sent for registration under this section shall include particulars as to the amount or rate per cent, of the commission, discount, or allowance so paid or made, but an omission to do this shall not affect the validity of the debentures issued: Provided that the deposit of any debentures as security " for any debt of the company shall not for the purposes of this provision be treated as the issue of the debentures at a discount. (5) The Secretary of State of Canada shall give a certifi'-, cate under his hand of the registration of any mortgage or charge registered in pursuance of this section, stating the amount thereby secured, and the certificate shall be conclusive evidence that the requirements of this section as to registration have been complied with. (6) The company shall cause a copy of every certificate of registration given under this section to be endorsed on every debenture or certificate of debenture stock which is issued by the company, and the payment of which is secured by the mort- gage or charge so registered : Provided that nothing in this sub-section shall be con- strued as requiring a company to cause a certificate of registra- tion of any mortgage or charge so given to be endorsed on any debenture or certificate of debenture stock which has been issued by the company before the mortgage or charge was created. (7) It shall ha the duty ol' the company to send to the Secretary of State of Canada for registration the particulars of every mortgage or charge created by the company and of the issues of debentures of a .series, requiring registration under this section, but regiptration of any sncli mortgage or charge may be effected on the application of any person interested therein. Where the registration is effect(!d on the application of some person other than the company, that person shall be entitled to recover from the company the amount of any fees properly paid by him to the Secretary of State of Canada on the registration. (H) The register kept in imrsuance of this section shall he open to inspection by any person on payment of the prescribed fee. (D) FiVciy company shall cause a copy of every instrument creating any mortgage or charge requiring registration under this section to be kept at the registered ofTice of the company: "Provided that, in the case of a series of uniform deben- tures, a cfipy of one snch debenture shall be sulliciont. Imp. Act, 1008, s. 93. n.c.A.— 2 o?. 354 DOMINION COMPANIES ACT. Sect. 69i?. 69i!. (1) IT any person obtains an ordor for llic iii)|)()iiit- — 7 inont of a receiver or nianacrer of tlie propertv of a company, ReKistrabou +1 • i i J> ofordor ^'*^" iipp^^ints ^sucli a receiver or niann.i^er under any poweivs con- appoiutiug tained in any instrument, he shall within fourteen days from the receiver. ^^^q ^f ^\^q order or of the appointment under the powers con- tained in the instrument give notice of tlie fact to the Secretary of State of Canada, and the Secretary of State of Canada shall, on payment of the prescribed fee, enter the fact in the register of mortgages and charges. (2) If any person makes default in complying with the requirements of this section he shall be liable on summary con- viction to a fine not exceeding twenty dollars for every day during which the default continues. Imp. Act, 1008, s. OJf. Filing of 69c'. (1) Every receiver or manager of the property of a rivers and ^onipany who has been appointed under the powers contained managers. in any instrument, and who has taken possession, shall, once in every half year while he remains in possession, and also on ceasing to act as receiver or manager, file with the Secretary of State of Canada an abstract in the prescribed form of liis re- ceipts and payments during the period to which the abstract relates, and shall also on ceasing to act as receiver or manager file with the Secretary of State of Canada notice to that efPect. and tlie Secretary of State of Canada shall enter the notice in the register of mortgages and charges. (2) Every receiver or manager wlut makes default in com- plying with the provisions of this section shall be liable o-^ summary conviction to a fi'ne not exceeding two hundred dollars. Imp. Act, 1908, s. 95. Reotifioation 69i). The court of tlu^ ])rovinc'e in which the head office mort-'\l:es ^'^ °^ ^^® company is situated, on being satisfied that the omission to register a mortgage or charge within the time hereinbefore required, or that the omission or misstatement of any particular with respect to any such mortgage or charge, was accidental. or due to inadvertence or to some other sufficient cause, or is not of a nature to prejudice the position of creditors or share- holders of the company, or that on other grounds it is just and equitable to grant relief, may, on the application of the company or any person interested, and on such terms and conditions a^i seem to the court just and expedient, order that the time for registration be extended, or, as the case may be, that the omis- sion or misstatement be rectified. Imp. Act, 1908, s. 9G. Entry of 69i:. The Secretary of State of Canada may, on evidence satLsfaction. being given to his satisfaction that the debt for which any registered mortgage or charge, was given has been paid or BOEROWIXG. 355 satisfied, order that a memorandum of satisfaction be entered Sect. 69e. on the register, and shall if required furnish the company with '- a copy thereof. Imp. Act, 1008, s. 97. 69f. The Secretary of State of Canada shall keep a chro- index to nological index, in the prescribed form and with the prescribed register of particulars, of the mortgages or charges registered with him ^"^^ chSes under this Act. Imp. Ad, 1908, s. 98. 69g. (1) If any company makes default in sending to the Penalties. Secretary of State of Canada for registration the particulars of any mortgage or charge created by the company, and of the issues of debentures of a series, requiring registration under the foregoing provisions of this Act, then, unless the registration has been effected on the application of some other person, the company, and every director, manager, secretary, or other per- son who is knowingly a party to the default, shall be guilty of an indictable offence and be liable to a fine not exceeding two hundred dollars for every day during which default continues. (2) Subject as aforesaid, if any company makes default in complying with any of the requirements of "this Act as to the registration with the Secretary of State of Canada of any mort- gage or charge created by the company, the company and every director, manager, and other officer of the company who know- ingly and wilfully authorized or permitted the default shall, without prejudice to any other liability, be liable on summary conviction to a fine not exceeding five hundred dollars. (3) If any person knowingly and wilfully authorizes or I^ermits the delivery of any debenture or certificate of debenture stock requiring registration with the Secretary of State of Can- ada under the foregoing provisions of this Act without a copy of the certificate of registration being endor.sed upon it, he shall, without prejudice to any other liability, be liable on summary conviction to a fine not exceeding five hundred dollars. Imp. Act, 1008, s. 90. 69ii. (I) Every company shall keep a register of niort- ^^oniP'^ny's gages and enter therein all mortgages and charges specifically moJtgaiel affecting property of the company, giving in each case a short description of the -property mortgaged or charged, the amount of the mortgage or charge, and (except in the case of securities to bearer) Hio nnnic- of tlu- mortgagees or p<'rsons entitled thereto. (2) Jf any director, manager, or other officer of the com- pany knowingly and wilfnlly authorizes or permits the omission of any cnlry required to be made in pursuance of this section, he shall be liable on summary conviction to a fine not exceeding two hundred dollars, hn/i Art, 1008, s. 100. 356 DOMINION COMPANIES ACT. Scot. 69i. 69i. (1) 'I'lu' fopit's of iiislniniciils crraliiiij aii^' mortgage -^- — or duirge requiring registration nnder this Aet with tlie Secre- iiVs^>oot*^ tarv of State of Canada, and the register of mortgages kept in copies of pursuance of the last foregoing seciion, sliall he open at all rea- instnimeuts j;oi^;^b]e times to the inspection of any creditor or shareliolder c*voii till*' mortgages of the company witliout fee, and the register of mortgages sliall aiul charges also he open to tlie inspection of any other person on payuient company's ^'^ ^^^^^^ ^'^^' "^'^ exceeding twenty-li've cents for each inspection, io;;i-:tM-"of as the company may prescribe. mortgages. ^2) If inspection of the said copies oi- register is refused, any officer of the company refusing inspection, and every direc- tor and manager of the company authorizing or knowingly and wilfully permitting. tlie refusal, shall be liable on summary con- viction to a fine not exceeding twenty dollars, and a further fine not exceeding ten dollars for every day during which the refusal continues. Imp. Act, 1008, s. 101. Ri^htof 69.1. (1) Every register of holders of debentures of a del>enture company shall, except when closed in accordance with the inspect tJie by-laws of the company during such period or periods (not re.irister of exceeding in the whole thirty days in any year) as may be hoklers'an'd specified in the said by-laws, be open to the inspection of the to have copy registered holder of any such debentures, and of any holder of of trust deed, giiaj-es j^ the company, but subject to such reasonable restric- tions as the company may by by-law impose, so that at least two hours in each day are appointed for inspection, and every suoh holder may require a copy of the register or any part thereof on payment of ten cents for every hundred words required to be copied. (2) A copy of any trust deed for securing any issue of debentures shall be forwarded to every holder of any such debentures at his request, on payment in the case of a printed trust deed of the sum of twenty-five cents, or such less sum as may be prescribed by by-law of the company, or, where the trust deed has not been printed, on payment of ten cents for every hundred words required to be copied. (3) If inspection is refused, or a copy is refused or not forwarded, the company shall be liable on summary conviction to a fine not exceeding twenty dollars, and to a further fine not exceeding ten dollars for every day during which the refusal or neglect to forward a copy continues, and every director, man- ager, secretary, or other officer of the company who knowingly authorizes or permits the refusal shall incur the like penalty. Imp. Act, 1908, s. 102. Payments of 69k. (1) Where, in the case of a company, either a receiver ^?f**^^f° ^^^}-^ is appointed on behalf of the holders of any debentures of the out of assets ' ' i i ^ j.- i • • j. i u subject to company secured by a floating charge, or possession is taken by floating Qj. Qn behalf of those debenture holders of any property com- BOEROWING. 357 prised in or subject to the charge, then, if the company is not Seat. 69k. at the time in course of being wound up, the debts which in ; winding-up are under the provisions of the Winding-up A ct *^^lf^^^^^" ity to relating to preferential payments to be paid in priority to all claims under other debts, shall be paid forthwith out of any assets coming ^^''^^ ^"'''^^»*^- to the hands of the receiver or other person taking possession as ^•-,^- ^- •^'*^' aforesaid in priority to any claim for principal or interest in ^' respect of the debentures. (2) The period of time mentioned in the said provisions of the Winding-up Act shall be reckoned from the date of the appointment of the receiver or of possession being taken as aforesaid, as the case may be. (3) Any payments made under this section shall be re- couped as far as may be out of the assets of the company avail- able for payment of general creditors. Imp. Act, 1908, s. 107. 69l. The provisions of this Act respecting the registration Construction of mortgages, charges or other securities shall he in addition to °^ Provisions and not in substitution for the provisions of any statute of any registration, province of Canada or of anv foreign countrv in respect thereto. 7-8 Geo. v., 1917, c. 25, s. '9. 69m. a duly certified copy of any deed, mortgage, hypo- Quebec thee or other authentic instrument executed in the province of "otariiU Quebec and preserved in the records of a notary public of the |,',!|,*^'^,|° ^'^ province of Quebec, or in the office of a prothonotary of the fu-iglnals. Superior Court in any district of the said province, shall be < :\rort-a<>-e ' deemed to be an original deed, mortgage or instrument for the to inclml'e purposes of this Act, and the term ' moi-tgage ' shall include ' '''^i'**^''*^*"-' 'hypothec' 1918, 8-9 Geo. V., c. 14, s, 1; deemed to have come into force September 20th, 1917. 1. Borrowing- powers. (a) Implied and express. (b) The powers conferred by the Act. 2. Procedure for exercising- borrowing powers. 3. Interference with powers of directors to borrow. 4. What security may be given. 5. Necessity for by law Irregularities. 6. Giving security for existing debts. 7. Ultra vires borrowing — relief. 8. Bonds and debentures. (a) Description of the term. (b) Issuance. (c) Bearer and registered bonds. (d) Transfer of bonds. (e) Contract to purchase bonds. 358 DOMINION COMrANIES ACT. Sects. (f ) Debenture stock. 69- 69 M. (g) Mortgage bonds. Specific charge. Floating charge. 9. Trust Deeds. (1) Position of, powers and duties of the trustee. (2) Interest. (3) Redemption. (4) Enforcing the security on default. (5) Who may exercise remedies on default. (6) Receivers. (7) Modification of rights of bondholders. Borrowing There are various ways in which a company's power powers. , . 1 .' JT to borrow may be exercised, e.g., by unsecured loan, or overdrawing- its bank account which is a form of bor- rowing: Cunlijfe Brooks S Co. v. BlacMmrn Building Society (1885) 9 App. Cas. 865, 868; or by means of bills of exchange or promissory notes, the right to borrow on which is not restricted by s. 69. See as to bills of exchange and promissory notes to section 32 of the Act. In this connection it should be observed that the right to issue bearer notes or promissory notes in- tended to be circulated as money is expressly forbidden by section 5 (2). The more important forms of bor- rowing, however, are by means of mortgage of the real or personal property of the company, or by the issue of bonds, debentures or debenture stock, all of which are considered in this note. As borrowing involves the obligation to repay at some time a power to borrow does not authorize the issuing of perpetual or irredeemable debentures : In re Soutlfeni Brazilian Rio Grande del Sid Ry. Co. (1905) 2 Ch. 78, 82 ; but the issuing of such debentures is now expressly sanctioned by sub-section 3 of section 69. The giving of a mortgage to secure existing debts is not borrowing: Barthels v. Winnipeg Cigar Co. (1909) 2 Alta. L. R. 21. It has been held that the power con- ferred by the section to hypothecate, mortgage or pledge its real and personal property, so far as it con- flicts mth the law of the Province of Quebec is ultra BORROWING. , 359 vires: Re Dominion Marble Co. in Liqtiidation (1917) Sects. 35 D. L. R. 63. See now Statutes of Quebec, 1914, 4 69-69m . Geo. V. c. 51 and Lord v. Canadian Last Block Co. ~ (1917) 51 Que. S. C. 499. 1. Borrowings powers. (a) Implied and express. Every trading company has an implied power to borrow money for the purposes of its undertaking: General Auction Estate Co. v. Smith (1891) 3 Ch. 432. A trading company is ''one which has been incorpor- ated to carry on any lawful trade or business for the purpose of gain or profit": Sinclair v. Brougham (1914) A. C. 398; Bridfjeiuater Cheese Mfq. Co. v. Murphy (1896) 23 A. R. m, at p. 69, affirmed (1896) 26 S. C. R. 443. An implied power to borrow, where it exists, is limited in extent to what is reasonably necessary to enable the company to carry on its undertaking. See llufihes V. Northern Electric (1915) 50 S. C. R.^626, at p. 654. Thus, a rent guarantee company was held to have no implied power to borrow money for the pur- pose of making loans : Walmsley v. Rcyit Guarantee Co. (1881) 29 Gr. 484. A building society in Ontario if authorized by its rules to do so may borrow money for the purposes of the company and may charge or pledge its assets for the payment of the money borrowed: Re Farmers' Loan Co. (1899) 30 0. R. 337, but a buihling society may not carry on a banking business and borrow money from its members on deposit : Sin- clair V. Brougham., supra. In regard to a non-trading companv, it is settled 'iVading I • T.-i 1 1 XI J ii • 1 '\ 1 companies. law m J^jugland that there is no power to borrow unless it is conferred expressly or by implication. The powers of a corporation establisliod for certain specific pur- poses must depend on wliat those purposes are, and except so far as it has express power given to it, it will have such powers only as are necessary for the purpose of enabling it in a reasonable and proper way o()0 DOMINION COMPANIES ACT. Sects. to discliarg'o the duty or i'uliil tlu> purposes for wliich ^^'^^^'^- it was constituted : The Queen v. Sir Charles Reed (1880) 5 Q. B, D. 483. But corporations lacking ex- press power and not engaged in a business where it would be implied, can, in all cases of need, if in the given course of their business, borrow if not positively forbidden. This is on the assumption that the business which requires aid is the legitimate business of the comj)any: Walmsley v. Rent Guarantee Co. (1881) 29 Gr. 484.' Senii-puhiic With regard to semi-public corporations such as corpoiations. j.r^jj^yj^y companies, and water works companies, it has been laid do^\^l as a general rule in England that they can borrow only if they have express authority in their charter. Thus implied power to borrow has been de- nied to a mining company: Lowndes v. Garnett (1864) 33 L. J. Ch. 418; an insurance society: Re Norwich Equitable Fire Insurance Society (188G) 34 W. R. 206; a railway company: Re Cork, etc., Railway Co. (1869) L. R. 4 Ch. 748; a navigation company: Raroness Wen- lock V. River Dee Co. (1885) 10 App. Cas. 354. But see judgment of Strong, C.J., in Rickford v.. Grand Junction R. Co. (1877) 1 S. C. R. 730, 737. The implied common law power to borrow is ex- cluded by an express power on the principle expressum facit cessare taciturn : Re Qeneral Provident Co. (1869) 38 L. J. Ch. 320. Limited Wlicii a socicty or company has upon the face of its powers. constitution, that is, either by the statute or the statu- tory rules under which it is constituted, only a limited authority to borrow, the person dealing with such society or company must inquire or run the risk: Chapleo v. Rrunswick Ruilding Society (1881) 6 Q. B. D. 715; and where a company is incorporated under a public Act the provisions of which forbid borrowing or buying on credit, no implied authority can arise. And where directors of such a company have purchased goods on credit, they cannot be held liable or made to account for them on any principle: Struthers v. Wlac- kenzie (1897) 28 0. R. 381. See also Richardson v. WiUiamson (1871) L. R. 6 Q. B. 276; and Cherry v. BOEEOWIXG. 361' Colonial Bank of Australasia (1869) L. E. 3 P. C 24, Sects, as explained in Beattie v. Lord Ehury (1872) L. R. 7 69-69m. Ch. 777, at pp. 795-6; Weeks v. Propert (1873) L. R. 8 C. P. 427; West London Commercial Bank v. Kitson (1883) 12 Q. B. D. 157, 13 Q. B. D. 360; Firhanks' Exe- cutors V. Humphreys (1886) 18 Q. B. D, 54; Elkington & Co. V. Hurler [1892] 2 Ch. 452; Rashdall v. Ford (1866) L. E. 2 Eq. 750; Beattie v. Lord Ehury (1874) L. E. 7 H. L. 102. (b) The powers conferred by the Act. Section 69 enables the directors if authorized bj^ by-law properly sanctioned by the shareholders to bor- row money on the credit of the company. No limitation as to the amount or tlie purpose of the borrowing is im- posed by the Act itself. A limitation might be imposed by the letters patent, in which case if the limit is ex- ceeded queer e whether such borro^\ing would be idtra vires: Bonanza Creek Gold Mining Co. v. The King (1916) 1 A. C. 566. A lender is not bound to enquire into the purposes for which the money borrowed is intended to be ap- plied: Young v. David Payne (1904) 2 Ch. 608. He should, therefore, refrain from making such enquiry, for if he learns that the object of the loan is unautho- rized and then advances his money he can not recover it: Davis's Case (1871) 12 Eq. 561. The reciting in a mortgage of a consideration which is illegal, l)ut which is not the real consideration, the latter being the dis- charge of the company's existing indebtedness and securing financial aid for the future, Avill not make the mortgage invalid: Hughes v. Northern Electric (1915) 50 S. C. E. 626. If a director of a company making the loan is also a director of the company which borrows tho money his knowledge olitainod in the one capacity will not be imputed to the lending company for he owes it no duty to disclose the inforinalion : Young v. David Payne £ Co., supra. A person proposing to lend money to a company incorporated undf-r the Act should sjitisfy himself on the following points : — oG2 DOMINION COMPANIES ACT. Sects. (1) AVhetlior there is any limit to tlie company's 69-69M. borrowing powers imposed by the letters patent or Preoautions. Supplementary letters patent. If the original docu- ments are not available for inspection, certified copies should be obtained from the department of the Secre- tary of State. (2) Whether a by-law authorizing the directors to l)()rrow has been passed and confirmed by the share- liolders. A copy of the by-law^ certified by the president and secretary under the seal of the company as being correct and as having been duly passed by the direc- tors and ratified by the shareholders should be ob- tained. The question of the necessity for the existence of such a by-law for the validity of securities taken by the lender is considered below, but as a matter of sound practice the lender should satisfy himself as above. (3) Wliether the officers who negotiate the loan and who sign the notes, bills, mortgage or whatever security is taken have been duly empowered by resolu- tion of the directors to sign the company's name. It is desirable that the borrowing by-law should authorize the giving of this authority to the officers by resolution of the directors, and a copy of the resolution should be obtained certified under the hands of the president and secretary with the company's seal affixed as having been duly passed at a meeting of the directors regular- ly convened at which a quorum of the directors was present. 2. Procedure for exercising borrowing powers. The common practice is for the directors in tlie organization stage of the company to pass a by-law authorizing generally the borrowing of money by the directors from time to time in such amounts and in such manner as they shall in their discretion think fit. Owing to the doubt raised by Johnston v. Wade (1908) 17 0. L. R. 372, it is inadvisable that the by-law be passed by the provisional directors. The by-law should be ratified by the vote of not less than two-thirds in value of the shareholders repre- sented at a general meeting called for considering the BOEROWIXG. 363 by-law. A majority of two-thirds of the whole body Sects, of shareholders is not required; see Pacific Coast Goal 69-69:^1. Mines v. Arhuthnot (1916) 31 D. L. R. 378, at p. 379. procedure. The notice of meeting should specify the nature of the by-law to be considered thereat. ' ' Two-thirds in value of the shareholders" means that the votes are to be computed according to the face value of the shares and not according to the amount paid: Purdom v. Ontario Loan (1892) 22 0. R. 597. The authorization to bor- row should be general as it is obviously impracticable for each specific borrowing to be separately authorized bv the shareholders; such a bv-law is sufficient autlio- rization for the hypothecation of the company's securi- ties to secure the present and future indebtedness of the company: Standard Bank v. Stephens (1908) 16 0. L. R. 115. It is desirable that the signing authority of the officers pursuant to tJie borrowing by-law should be conferred by resolution of the directors. The reason is that the officers who sign on behalf of the company may be changed or be absent when signatures are required, and in such event a new resolution can be readily passed by the directors. 3. Interference with powers of directors to borrow.' When borrowing powers have been vested in the directors by a by-law regularly passed, the exercise of those powers can not subsequently be controlled by a mere resolution of the shareholders: Cann v. Eakins (1890-1) 23 N. S. R. 475 ; Colonist Printinr/ and Puhlish- infi Co. V. Dunsmuir (1902) 32 S. 0. R. 679, 9 B. C. R. 290. Xor will the Court control the terms and condi- tions of a h)an on the apiilicaliou of a shareholder where they are not clearly illegal : Farrrll v. Caribou Gold Miviriff Co. (1897) 30 N. S. R. 199. 4. What security may be given. The directors are authoj-izcd by subsection (d) of section 69 to ** hypothecate, mortgage or phnlge the i-cal or personal proi)erty of the coiii|t;iii\ , <»i- liotli" In secncc flie bonds, debentures or other securities men- 'MU DOMINION COMPANIES ACT. Sects. tioiiod in subsection (c) and aiij' money borrowed for ^^''^^-'^'^- the purposes of the company. The words "for the What purposes of the company" are, doubtless, mere sur- fe'"lven™'''^i^^"'^'^^-''' cf., the remarks of Bucldey, J., in Young v. David Payne S Co. (1904) 2 Cli. 608, at p. 612. A mortgage of "all property, real and personal that shall hereafter be acquired by the company" in- cludes book debts: Re Perth Flax and Cordage Co. (1909) 13 0. W. R. 1140. Where future clioses in action are mortgaged and the description is sufficient to per- mit their identification, then the beneficial interest therein vests immediately on' their coming into exist- ence. And it was held in the foregoing case that the omission of the mortgagee to give the debtors notice of the assignment would not, as against the liquidator of the company, defeat tlie rights of the mortgagee. Uncalled capital can not be mortgaged under the section, for it is more in the nature of a power than a right; see Bank of South Australia v. Abrahams (1875) L. R. 6 P. C. 2G5; Colonial Trusts Corporation (1880) 15 Ch. D. 465; Sankey Brook Coal Co., No. 2 (1871) 10 Eq. 381; i^e Stredtham Estates Co. (1897) 1 Ch. 15; Johnson v. Russian Spratt's Patent (1898) 2 Ch. 149. But a mortgage of arrears of a call already made is valid under a general power to mortgage, and so also a mortgage of the proceeds of a call not yet made but already determined on: Humher Iron Works Co. (1868) 16 W. R. 474, 667; Sankey Brook Coal Co. (1870) L. R. 9 Eq. 721. A debenture which changes the undertaking of the company, and "all the property to which it now is, or shall at any time hereafter become entitled, and all estate, right, title and interest of the company in, to and upon the said premises" does not constitute a charge upon the uncalled capital of the company: Johnson v. Russian Spratts Patent [1898] 2 Ch. 149. The right to be a corporation is not, of course, sus- ceptible of alienation by mortgage or otherwise, but it is not easy to find any conclusive reasons why other BORROWIXG, 365 powers, such as taking lands, operating- the railway, Sects, taking tolls and exercising the other rights and powers 69-69m. usually conferred upon railway companies, should not -^vhat be susceptible of transfer, the transferee, of course, feminity maj^ . be given. being subject to all trusts and burdens in favour of the public which the original company was liable to : Bick- ford V. Grand Junction R. Co. (1877) 1 S. C. R. p. 738.- When a harbour company had power to mortgage its harbour and tolls to a limited amount, and a mort- gage made by it was foreclosed and the mortgagee entered into possession, and his lessee brought an action for tolls, it was held that he had no right to act as the corporation and sue in his own name for the cor- porate tolls: Whiteside v. Bellcliamher (1872) 22 C. P. 241. Tlie general rule is that a franchise is personal to the grantee. And an execution creditor of a railway company cannot exercise the powers conferred by the Act of in- corporation : Peloe .Y. Wetland Ry. Co. (1862) 9 Gr. 455. In regard to property situate in a foreign country Foreign or out of the jurisdiction of the Courts, it is well settled -assets. law that the company can make a valid charge of such property without regard to the formalities imposed by the lex loci. Tliis is on the principle of Penn v. Lord Baltimore (1850) 1 Ves. Sr. 444. Equity Acts in personam and wliere the company giving the charge is within the jurisdiction, it will l)e ~ enforced : Mercantile, etc., Co. v. River Plate Co. [1892 J 2 Ch. 303 ; Hicks v. Powell (1874) L. R. 4 Ch. 741 ; Ex p. HoUhausen, L. K. 9 Oil. 722; Coote v. Jecks (1872) L. K. 13 Eq. 597. But where the foreign law does not recognize the charge as a valid one the debenture hold- ers will not be entitled to prevent an unsecured creditor rioiii i(;ili/,iiig against a foreign asset: Re Maudslay, IS ons d- Field |1900| 1 (Mi. (m-, Liverpool Marine Credit Co. v. Hunter (1867) L. R. 4 Eq. 62, 3 Ch. 479; NorfoH v. FlorenT;e Land and I'lihlic Works Co. (1877) 7 Ch. I). 332; ;iii(l Hiis (locii-iiic .•i|»|tlics not only to ini- ni()\';ililr pi'Dpcit y or to movable propcrl y li;i\'ing actunl .■)()() DOMINION COMPANIES ACT. Sects. locality, but to a foreign debt which has a (puisi locality 69-69M. and must be treated as being situate in the foreign country : L\' Maudslay, Sons S Field [1900] 1 Ch. 602. As to whether a general charge of all the property of the company includes the company's books, see Engel v. South Metropolitan Co. [1892] 1 Ch. 442; Clijne Tin Plate Co. (1882) 47 L. T. 439. 5. Necessity for by-law — irregularities. How far is it a condition precedent to the right of the directors to borrow that the by-law mentioned in the section be passed! The question involves difficul- ties but some points appear to be fairly clear. (1) The directors are agents of the company. The general powers conferred on them by ss. 80 and 69 are for the purposes of horroiving limited by the provisions of this section, and it is a condition precedent to the exercise by them as agents .of the com- pany of the power to borrow that the prescribed by-law be passed. Until the by-law has been passed they are not vested with the power to borrow. (2) From this it follows that a shareholder could, until the by-law had been passed and sanctioned, enjoin them from borrowing because the proposed act is under these circumstances ultra vires in the secondary sense. Supposing the lender has loaned and as part of the transaction has taken securities of the company for repayment, but the prescribed by-law has not been passed, and the lender made no inquiries and had no notice of the omission, what are his remedies'? While section 69 provides that if the direc- tors have been authorized by by-law duly ratified by the shareholders they shall have power to borrow, the acts of the directors in case they purport to borrow without such authorization are irregular only and may be ratified subsequently by the requisite majority of the shareholders: Adams v. Bank of Montreal (1899) 8 B. C. R. 314; affirmed (1901) 32 S: C. R. 719. The section is directory and not imperative. Where an act is capable of being validly done with the approval of a BOEROWIXG. 367 majorit}^, then the majority alone can complain if such Sects. approval has not been obtained, and the action must be 69-69m. brought in the name of the company: Macdougall v. Necessity Gardiner (1876) 1 Ch. D. 13; Burland v. Earle (1902) f;?;,]'-';;!'^^'— A. C. 83 ; Dominion Cotton Mills v. Amyot (1912) A. C. tiesr"" ''^ 546. A minority of the shareholders has no locus standi. Where a by-law has been passed and approved at a meeting of shareholders which is not a special meeting, and a large majority of the shareholders have voted in favor of the security given, semhle, per Street, J., in Trusts and Guarantee v. Ahhott Mitchell (1906) 11 0. L. R. 403, that is a sufficient compliance with the Act. ■ What is the position of the lender wlio has made an advance without informing himself as to the existence of a by-law authorizing the borrowing, where no by- law in fact exists or where it has not been authorized by the requisite majority of shareholders at a meeting properly convened and where the security taken is at- tacked by the company itself or by a liquidator? Persons dealing with a company will be fixed with Application notice of everything contained in the Act under which RnyynHt- the company is incorporated and they may be further Turgualui.'''' taken to liave knowledge of the contents of the letters patent which are accessible by search in the proper office, but further tlian tliat they need not go, per Killam, J., in McEdivards v. Ogilvie Milling Go. {1S87) 4 Man. R. ], at p. 6; Montgomery v. Mitchell (1908) 7 W. L. R. 518, at p. 524; Hhevpard v. Bonanza (1894) 25 O. R. 305. See also Thompson v. Brant ford Electric (1895) 25 A. R. 340; Merchants Bank v. Han- cock (1884) 6 0. R. 285; McDouqall v. Lindsay Paper Mill Co. (1883) K) P. R. 247, at p. 252; Ca^in v. Interna- tional Trust (1894) 40 N. S. R. 65; McKain v. Cana- diau Birkheck (1904) 7 O. L. R. 241, 247. See also Jrfforsou \. Pacific Coast Company Mines, Lid. (1916) ■*n n. L. R. 557. A person who bona fide takes a security is not bound 1o enquire into tlif regularity of the directors' proceed- 3(j8 1)():\iixi()N comi'amks act. Sects. ings loading up Id the giving of the security and in this 69-69M. regard a sliarehokler is in no worse position than a Necessity stranger: Jackson v. Cannon (19U3) 10 \\. 0. 11. 73. for by-law— This is Only another {ipi)lication of the rule in Royal ties. British Bank v. Tiuqiiand, and the reason for it is thus stated by Lord Macnaghten in ]\Ionl real and St. Law- rence, ic, Co. V. Robert (190G) A. C. 196', at p. 202, "But the by-laws . . . are not public property. Those who deal with the company have no means of access to them, no right to pry into the company's archives or interrogate its officials." In the last men- tioned case the officials of the company had put forward a copy of a resolution which purported to have been regularly passed and the company was held not en- titled subsequently to avoid it by showing that it had been passed by an insufficient quorum. While knowledge of an irregularity in the passing of the by-law would disentitle a lender to the protection of the rule in Royal British Bank v. Turquand, where the lender and the borrower are companies and one person is an officer of both, his personal knowledge is not necessarily the knowledge of both companies: Young v. David Payne (1904) 2 Ch. 608. A lender, then, having taken a security apparently (hily executed by the company is entitled to assume that ever^'thing necessary to its valid execution has been regularly and properly done and neither the company nor its liquidator, who stands in no better position, can attack the security for irregularity, per Moss, C.J.O., in Hammond, v. Bank of Ottawa (1910) 22 0. L. R. 73, at p. 80. See also In re Summer side Electric (1908) 5 E. L. R. 129, where it was sought to invalidate bonds because the by-law authorizing them had not been properly ratified. In Duck v. Tower Galvanizing Co. (1901 ) 2 K. B. 314, where no directors of the company had been appointed and no resolution passed a bona fide holder for value of debentures obtained priority over an execution creditor. See also County of Glou- cester Bank v. Rudry (1895) 1 Ch. 629; In re Bank of Syria, Oiven & Ashforth's Claim (1901) 1 Ch. 115. See also Commercial Rubber Co., Ltd. v. St. Jerome . BORROWING. 369 (1908) Q. K. 17 K. B. 275, as to the duty of the company Sects, to cure an irregularity of this character. 69-69m. An execution creditor can not interfere even where Necessity no by-law has been passed and neither the company ^jj.5^;yjYj,-. nor the shareholders have complained of the irregu- ti^s. larity : Merchants' Bank v. Hancock (1884) 6 0. R. 285. Even where minority shareholders would be en- titled to have a mortgage set aside on the ground that it constituted a fraud upon the minority, if bonds issued under the mortgage have got into the hands of third parties neither the bonds nor the mortgage can be set aside: Cann v. International Trust (1891) 40 N. 5. R. 65. In the last mentioned case the objecting shareholders were, however, held entitled to some re- lief and a reference was ordered to ascertain the value of the property misapplied, and it was further held that a receiver might be appointed and the company wound up. The Court of Appeal of Ontario differed in the case of Johnston v. Wade (1908) 17 0. L. R. 372 as to whether the provisional directors of a company had the power to pass a borrowing by-law, l)ut the by-law there in question had been confirmed at the meeting of shareholders at which the provisional directors had been elected permanent directors and it was hold to be valid. Question may also arise wliethcr a company has C(»mpiiance become entitled to exercise any borrowing powers be- ^^^*^^ ^- -'^• fore ten per cent, of its authorized capital had been subscribed and paid for; see the note to s. 26. It is advisable in the case of newly incorporated companies to take a statutory declaration from some responsible oflScer of the company covering this point. 6. Giving- security for existing debts. There is a disliiiciiou l)etween borrowing and giving security for an existing debt. Every trading company has an implied power to do tlio latter: TiarfJids, S'Jic- wan S Co. V. Winnipeg Cigar Co. (1909) 2 Alta. L. T?. n.c.A.— 24 370 DOMINION COMPANIES ACT. Sects. 21, uiik'ss the power be expressly restraiuetl or i)L'()lii- 69-69M. bited by the governing Act: Loikj v. Hancock (1885) ~ "~ 12 S. C. R. 532. When a mortgage was given by a railway company to secure advances by a bank to the contractor, who was building the railway, it was held by the Supreme Court of Canada : Giving: First. Prima facie, any corporation has pov/er security for , , ., .' '' ^ , i- . existing to mortgage its property, and no enabling power is re- (lobts. quisite to confer it. But if a company's rights in this respect are limited, it must be by force of some disa- bility in the instrument creating it, whether that instru- ment be a statute or a royal charter. Further, that such a disability may be deduced, either by the corpora- tion being limited to certain specific objects, or from its property being subject to charges or trusts in favor of the public with which a mortgage would be inconsistent. Secondly. That the company having the power of doing the actual construction work itself, and of secur- ing the cost by giving a mortgage upon any property which, in other respects, they were free to give as security, were not disabled from mortgaging their pro- perty as collateral security in aid of the contractor : Bickford v. Grand Junction R. Co. (1877) 1 S. C. R. 730. See also s. 32 of the Dominion Coiii[)aiiies Act, which has the etfect of rendering the company liable for loans made through its officer, its agent, or servant, acting in general accordance with his powders under the by-laws of the company. And see generally. Commercial Bank of Canada v. Great Western Raihvay Co. (1865) 3 Moore P. C. (N. S.) p. 313; Water oils Engine Co. v. Town of Palnier- ston (1892) 21 S. C. R. 556; Neelon v. Thorold (1893) 22 S. C. R. 390; MacArthur v. Town of Portage la Prairie (1893) 9 M. R. 588; Bernardin v. North Duf- ferin (1891) 19 S. C. R. 581 ; Re Rockivood Agricultural Society (1899) 12 Man. R. 655; Gait v. Erie R. Co. (1868) 14 Gr. 499; Lincoln Paper Mills Co. v. .S'^. Catharines R. Co. (1890) 19 0. R. 106. BOEROWING. 371 The principle on wliicli sucli transactions will be Sects, held valid is well put in Stagg v. Med wag (1901-2) 50 69-69m. W. R. 446, where a companj^ having borrowing powers cAviw limited to mortgages on its undertaking gave a mort- sf<:>":ity for ^ '^ f. n existing gage of its surplus land m arranging for the transfer- debts. ence of an existing debt. Swinfen Eady, J., at p. 447 said, "If the surplus lands of a company are liable to be taken by a creditor obtaining judgment against the company, the company can anticipate that event by making them a security for the debt. On that ground I hold that the transaction proposed is valid. The com- pany are making no fresh loan, but are arranging terms with regard -to an antecedent debt. ' ' The distinction between borrowing and giving security for existing debts may be of importance. Thus, for example, in Trusts and Guarantee Co. v. Abbott Mitchell Iron and Steel Co. (1906) 11 0. L. R. 403, where the directors of a company pledged certain material and assigned book debts to the company's bankers to secure an overdraft without a two-thirds vote of the shareholders as required by s. 49 of the On- tario Companies Act (corresponding to s. 69 of the Do- minion Act) the transaction was sustained as being within the general powers of the directors under s. 4(5 of the Ontario Act (corresponding to the preliminary clause of s. 80 of the Dominion Act). Sec also Scott v. Colburn (1858) 26 Beav. 276; In re Patent File Co. ( 1871 ) L. R. 6 Ch. 83, where a company secured a past debt by the deposit of title deeds. The fact that subsection (d) of s. 69 confers an^. Gy(d). c.xpicss auliiorization, subject to the restrictions im- posed by the section, to give security Tor any money borrowed foi- the pni-poses of the c<)m]»any, raises the question how ;iiiy inii)lie(l powci- 1o give security for debts incuricd (•;iii exist alongside^ of the express power. The distinction a])pears to be thnt if the money is borrowed on the strength of the security the section ;i)>plies, bnt not if the debt has bona fide arisen with- out ;inv i-elnetance in liiving or of taking seeni-ity. bonds. 372 DOiAllMON COMPANIES ACT. Sects. The directors are given power under sub-section 69-69m. (c) of section G9 to pledge or sell the bonds of the com- PiedReof pany "for such sums and at such prices as may be deemed expedient." It is not necessary that the direc- tors should negotiate the bonds for cash. The issue or pledge of bonds to a creditor may be treated as a bor- rowing under a general borrowing power, and the reason for this is thus stated by Kay, J., in Hoivard v. Patent Ivory Co. (1888) 38 Cli. D. 156, at p. 170, ''If you might not issue debentures to a creditor under a borrowing power, it would come to this that you would have to issue debentures to the bankers or somebody else, who would advance the money and then pay that over to the creditor, or issue debentures to the creditor himself, he lending you the money first and then you paying it back to him. Of course it is obvious that such a roundabout proceeding as that need not bo resorted to and the court looks to the substance of the matter." Where the Act of incorporation gave the directors power to "issue and sell or pledge all or any of the . . . bonds for the purpose of raising money for the prosecution of the . . . undertaking," it was held that using bonds in the following manner was within the po\yer. The company, a railway, made an agreement with contractors for the construction of part of its road, and deposited bonds to secure payment, and on tlie railway's default the bonds were delivered to the contractors at the rate of fifty cents on the dollar: Whmipef) mid Hudson's Bay Ry. Co. v. Mann (1890) 7 Man. L. R. 81. See also Re Inns of Court Hotel Co. (1868) L. R. 6 Eq. 82, at p. 89; Landowners West of England, Sc, Ry. Co. v. Ashford (1880) 16 Ch. D. 411. As to the rights of holders of bonds as collateral security where the terms of the issue itself do not authorize the use of the bonds by the company as col- lateral securitv for existing indebtedness, see Re B. C. Portland Cement Co., Ltd. (1915) 22 D. L. R. 609; (1916) 27 D. L. R. 726. Where the only real shareholders of a company had paid a part of tlieir own debt to the plaintiff with the BOEROWIXG. 373 company's money and had obtained the issue to him Seats. of shares of the company by way of security, it was 69-69m. held that this w^as not an assumption of the debt by the company and that the plaintiff did not become a credi- tor of the company for the balance : Re PengeUy-Akitt, Ltd. (1914) 16 D. L. E. 79. 7. Ultra vires borrowing— relief . The Act contains no limitation as to the amount which a company may borrow, A limitation might be imposed by the letters patent. A violation of such restriction apparently would not be ultra vires, the com})any being a common law corporation, but would give ground for proceedings by way of scire facias for the forfeiture of the charter: Bonanza Creek, Sc. Co. V. The King (1916) 1 A. C. 566. The Courts of Canada have for many years proceeded on the assumption that companies incorporated by letters patent under this and similar provincial acts possess only such powers as are in express terms or by necessary impli- cation conferred on them by their constating instru- ments (statute and charter), but this doctrine was to a great extent wiped out by the judgment in the case last cited. It must, however, be remembered that the doctrine applies to companies incorporated by special Act under Part II. Part. II. contains no special pro- visions with regard to borrowing, so that this is a con- venient point for the discussion of the doctrine of ultra vires as applied to borrowing, considered apart from the Bonanza Case. Where a company borrows in excess of its powers such borrowing will be ultra vires and not binding on the company, notwithstanding the assent of the share- holders: Ashhury By. v. Riclie (1875) L. R. 7 H. L. 653. A company can not be estopped by deed or other- wise from showing that it had no power to do that which it purports to do: Ex parte Watson (1888) 21 Q. B. T). 301, but see Clarke v. Sarnia (1877) 47 U. C. R. 30. AVhere a company has borrowed without autho- rity no debt, legal or equitable, is created which the lender can assert against the company unless he can ""4 ->/ DOMINION COMPANIES ACT. Sects. 69-69 M. I lira vires borrowing - — relief. Ix'iK'lit t)i' Olio or otluT of the following' Remedy against directors. rlnini the [)i'iiiciples (1) Where money borrowed has been used in pay- ini>' off an existing- or future enforceable debt the bor- rowing- is not nil Id vires for the transaction has not added to the liabilities of the company : Wrexham Mold and Couuak's Ry. (1899) 1 Ch. 440; Wetdocli v. River Dee (1887) 19 Q. B. D. 155; Bridgewater Cheese Mfq. Co. V. Murpliij (1896) 23 A. R. 66, affirmed 26 S. C. R. 443; /;/ -re Harris Calculatiuf/ Mach/ine Co. (1914) 1 Ch. 920; Roijal Bank v. B. C. Accident Co. (1917) 35 D. L. R. 650. In such a case the lender can recover the amount of the loan from the company, but he is not entitled to be subrogated to any securities or priorities of the creditors who are paid off by the moneys ad- vanced : In re Wrexham, supra. (2) If the money borrowed has not been disposed of, or has been used in the acquisition of an asset that can be identified, the lender is entitled to claim the particular money or asset: Sinclair v. Brougham (1914) A. C. 398.' Where a lender is not able to invoke either of the above principles and is precluded from claiming against the company in respect of an idtra vires loan, he may still have a personal remedy against the directors of the company, for the directors may be held liable for money borrowed in excess of the powers of the comjjany if they can be considered as having impliedly warranted their authority to bind the com- pany. So where advertisements were issued stating that loans might be made to the company by bringing the money to the office of the secretary and these adver- tisements were issued with the authority of the directors, and monevs were received after the bor- rowing powers of the company had been exceeded, it was held that the directors were personally liable for the moneys advanced, although there was no fraud on their part: Chapleo v. Brunswick Building Society (1880) 5 C. P. D. 331 ; 6 Q. B. D. 696. BORROWIXG. 375 Directors of a railway company advertised that Sests. they were prepared to receive proposals for loans on 68-83m. mortgage debentures of the company. The plaintiff rura vires applied to lend £500 ; his application was accepted, "^l^jleiYef,"^ and he was informed that when he was ready ^dth his money a debenture would be issued. This was held to amount to a warranty that the directors had power to issue a valid debenture. The company's borrowing power was exhausted at that time and the directors were accordingly personally liable to the plaintiff: Weeks v. Propert (1873) L. R. 8 C. P. 427. But directors will not be liable unless the implied Remedy representation is one of fact and not of law, so where du-ectors. a company was prohibited by the statute incorporat- ing it from buying goods on credit, it was held that the plaintiff was fixed with knowledge of the statutory disability and could not make the directors liable as their implied warranty of authority was one of law: Struthers v. Mackenzie (1897) 28 0. R. 381. Accord- ingly where the limitation on borrowing is contained in the governing act and could be discovered from a perusal thereof the directors can not be made liable. Where, however, the governing act does not show that tlie particular transaction is ultra vires, ej/., where the company has exceeded the amount which it is entitled to borrow the representation nuiy be one of fact and llic directors therefore may become liable. The measure of damage is arrived at by consider- Measure of ing the difference in position of the plaintiff as a '^'^™'''°^^- result of the misrepresentation. Thus if valid debiii- tures of tlie company would l)e wortliless the damages would be nothing, l)ut if they would be worth one hundred cents on the dollar the vjdue of the genuine debentures is the measure of the loss: Firhanks v. Hnwphrrj/s (1886) 18 (,). P>. i). 54; see also h'ichard- so)i v. Wi'lUawso)! (1870) L. II. C Q. B. 270. The fact that tlx' directors themselves were deceived jmd did not know that they had no ])()wer is imniatei-ial : Firhanks v. Hiimphreifs, supra, at p. 62. A company may sometimes validly contract a dchi in ru vires although securities may be gi\<'ii for the debt wiiicli '"'^" ' 376 DOMINION COMPANIES ACT. Sects. 69-69:^1. ritra fires borrow ing — relief. are ultra rircs of tlio company on accoinit oL" special provisions with reference to them. So, when a com- pany was prohibited from giving bills of exchange, but had power to mortgage and gave bills of exchange to secure an existing debt accompanied by a mortgage and made conditional on the payment of the bills, it was lield that the mortgage was given to secure the debt and not the payment of the bills, and was therefore not invalid on that account: Scott v. Colburn (1856) 26 Beav, 276. And where a comjiany issued bonds secured by a mortgage which it had no power to make, it was held that the bonds were not vitiated by the ultra vires mortgage. And in the case of a municipal cor- poration prohibited from selling, mortgaging or alienating any of its lands, it was held that while a mortgage given was a nullity so far as the transfer of property under it was concerned, still the covenant was good and valid and binding on the corporation: Payne v. Mayor of Brecon (1858) 3 H. & N. 572. Where a company has power to borrow, but the directors have only a limited powder and exceed it, the borrowing is irregular and the securities inoperative unless the creditor can avail himself of the rule in lioyal British Bank v. Tvrquand, supra. See Irvine v. Union Bank of Australia (1877) 2 App. Cas. 366, and Hoivard v. Patent Ivory Co. (1888) 38 Ch. D. at p. 170. 8. Bonds and debentures. (a) Description of the term. The terms " bonds " and " debentures " are used without any distinction of meaning in this country: Johnston V. Wade (1908) 17 0. L. R. 372. Debentures. *' Debenture " is not a strictly technical term, but is applied to a security for money, called on the face of it a debenture, and providing for the payment of a certain specified sum to the owner or bearer with interest in the meantime. It may be applied to any instrument shewing that the party making it owes money and is bound to pay it: Bank of Toronto v. Cohourg, etc., By. Co. (1884) 7 0. R. p. 7. BONDS. 377 A debenture may be a mere promise to pay or a Sects, promise to pay secured by mortgage or charge either 69-69m. jm- in the debenture itself or in a covering trust deed, or bod^s by a combination of both. See the observations of Lind- ^^gbentures. ley, J., in British India Steam Navigation Co. v. (Com- missioners of Inland Revenue (1881) 7 Q. B. D. 16"5 at p. 172, as to what various classes of instruments are entitled to be described as debentures. A debenture need not be under seal: Re Fire Proof Doors (1916) 2 Ch. 142: Biggerstaff v. Roivatt's Wharf (1896) 2 Ch. 93. Debentures usually provide for payment at a fixed date, but they may be payable on a certain contingency, such as winding-up, wherein they differ from a prom- issory note or bill of exchange, which must be payable at a fixed or determinable future time, that is at a fixed time, or at a fixed period after the occurrence of a specified event which is certain to happen. See Bills of Exchange Act, R. S. C. (1906) c. 119, s. 24. Section 69 enables a company incorporated under in-edeei the act to issue irredeemable debentures. In the ^''^^• absence of such a provision there is no such right, for the issuing of such securities is not a borrowing at all but the sale of a perpetual annuity, In re Southern Brazilian Rio Grande del Sul Ry Co. (1905) 2 Ch. 78. Debentures may be payable to bearer or registered liolder, or to bearer witli power to register them and make tliem transferable thereafter (until withdrawn from tlie register) only on the books of \\\v comiiaiiy. They may also be made payable to the registered liolde?-, but with coupons payable to bearer. As to the nature of a coupon see Mackenzie v. Conpnn. Montreal and Ottawa (1877) 27 U. C. C. P. 224. A detached coupon is subject to the covenant contained in tlie l)ond: Jjcvis County Ry. v. Fontaine (1904) Q. R. 13 K. B. 523, where it was lield tliat as the bond- holders were precluded by the trust deed from suing in their own name for interest on the bonds and, as the coupons pur[)orted to be payable at the office of a named trust company, the liolder of the coupons •'^78 DOMINION COMPANIES ACT. Sects. cMHild have known ol' tlio existence of the trust deed 69-69M. and was bound to assume that it contained the usual conditions. Bonds. Debentures are usuallj^ payable at a fixed place and must be presented there before payment can be enforced: McDonald v. Great ]Vestern Ry. Co. 21 IT. (\ R., 223; Osborne v. Preston (& Berlin Ry. Co. 9, U. C. C. P., 241; see also Becher v. Corporation of Amhersthurg, 23 U. C. C. P., 602. And in an action for damages by way of interest from the date the bonds or debentures are due until they are actually paid, the company may set up by way of defence that the bonds or debentures were not presented at the particular place, e.g., a bank, even if there were no funds in the bank at the time to meet the particular indebtedness : Montreal City Bank v. Cor- poration of Perth, 32 U. C. C. P. 18. But, otherwise, if the company were sued by way of debt on the bonds or debentures : Falloives v. Ottawa Gas. Co., 19 U. C. C. P., 174; Re TJiompson d Victoria Ry. Co., 9 P. R. 119. (b) Issuance. Debentures are not issued until they are delivered : Moiratt V. Castle Steel Co. (1886) 34 Ch. D. 58. The deposit of an unreg-istered debenture sealed in blank without name or date is an issue thereof : Perth Elec- tric Tramivays (1906) 2 Ch. 216. *' Issue " in a less proper sense may signify the preparation, signing and sealing of the documents and the ])lacing them absolutely out of the possession and control of the company, per Killam, J., West Cumber- land Iron Co. V. Winnipeg S Hudson's Bay Ry. Co. (1890) 6 Man. R. 396. See also Winnipeg and Hudson's Bay Ry. Co. v. Mann (1890) 7 Man. R. at pp. 93 and 94. By There is nothing to prevent debentures being issued by individuals, nor is it necessary that they should be under seal : British India dc. Co. v. Commissioners of Inland Revenue (1881) 7 Q. B. D. 165; but in the latter case they should be expressed to be made for valuable individuals. BONDS. 379 consideration received. A company may give a deben- Sects. ture in payment of an existing or past debt : Howard v. 69-69jm. Patent Ivory Co. (1888) Ch. D. 170. Where a portion of a series of debentures has been issued and a deben- ture holders' action has been brought the interest on the debentures issued having gone into arrear, the company can still issue more debentures of the same series before a receiver has been appointed, Be Hub- hard (1898) 68 L. J. Ch. 54. Debentures may be la^\'fully issued at a discount: Anglo Dauubian Steam Co. (1875) L. R. 20 Eq. 339; but it is illegal to issue debentures at a discount with a right of exchange for paid-up shares at par : Mosely V. Koffijfontein (1904) 2 Ch. 108. In modern flotations the practice has frequently Power to arisen of giving to subscribers for debentures or ^7/oommou"^ preference stock, certain shares of common stock as stock to a ,'.. . . subscriber a bonus. This practice is liable to give rise to subse- for bonds or quent difficulties on the part of the holders of this com- stock. moil stock unless the requisite steps are carefully taken. If the subscriber is an original subscril)or for the bonds, debentures or preference stock and at the same time subscribes for the common stock and such common stock has at the time of his subscription not been issued, but is standing as unissued stock in the books of tlie company, then the strong probability would be that in a winding-up proceeding, he, as the holder of common stock, would be placed on the list of contributories and made liable to pay 100 cents on tlie dollai- on tlie common stock whicii he had got as a bonus : hi re Railway Tiwc 'rabies (1S!)4) 02 L. J. (Ui. 935. hi oi-dcr 1() avoid this difficulty it is necessary tiiat tlif common stock sliouhl first be allotted and issued fully i)aid-up to one of the promoters and should actually be paid for by him at 100 cents on the dolhir either in cash or by the transfej- of pi-oijei-ty. IT paid foi- ill casli there is no power <»ii the p;ii-1 of the coin- paiiy to sell i1 I'm- less 1h;iii 100 cents on the dollar. 380 DOMINION COMPANIES ACT. Sects. If paid for in property the transaction cannot be ques- 69-69M. lioiuHl unless grounds are shewn which warrant its Bonds. being- set aside for fraud. Then, when the promoter has thus acquired the common stock fully paid,, he may deal with it as he sees fit and present any portion of it as a bonus to the subscribers for bonds, deben- tures or preference stock. See also Dorchester v. King (1915) 24 D. L. R. 373. Irregularity Bonds must be issucd in accordance with the provis- ions of the by-laws, and subject also to the provisions, if any, of the charter of the company. If they are irregularly issued the same considerations apply as have been discussed above with regard to the exercise of the company's borrowing powers, see p. 366. A bona fide holder for value without notice of the irreg- ularity is protected: Duck v. Tower Galvaniz'mq Go. (1901) 2 K. B. 314; Re Fire Proof Doors Ltd. (1916) 2 Ch. 142; 85 L. J. Ch. 444; but if he has notice he will not be protected, Davis's Case (1870) 12 Eq. 576. In the absence of holding out a company would not be estopped by a forged bond: Ruben v. Great Fingall (1906) A. C. 439. Irregular and insufficient debentures for which a lender has bona fide advanced money may be evidence of an agreement on the part of the company to issue valid debentures, so that the holder may have a good equitable debenture on the principle laid down in Strand Music Hall Co. (1865) 3 De G. & S. 147, where Lord Justice Turner said, "I apy^rehend, however, that where the court is satisfied that it was intended to create a charge, and that the parties who intended to create it had power to do so, it will give effect to that intention, notwithstanding any mistake which may have occurred in the attempt to effect it. ' See also Re Fire Proof Doors (1916) 2 Ch. 142; 85 L. J. Ch. 444, where the debentures had been irregularly sealed. Agreement An agreement for consideration to issue deben- o issue. tures charging property constitutes a present charge of such property and the proposed debenture holder is thereby protected against an execution creditor who intervenes before the debentures are actually issued: BONDS. ' 381 Simiiltaneous Colour Printing Co. v. Foiveraker Sects. (1901) 1 K. B. 771;. but in view of the provisions of 69-69m. the acts in the various provinces relating to the regis- tration of deeds and of chattel mortgages the principle stated in the above case is of little practical assistance. So also if a winding-up occurs before the debentures are issued the lender will be secured : Tailhy v. Official Receiver (1888) 13 App. Cas. 523; Re Hampshire Land Co. (1896) 2 Ch. 743; Pegge v. Neath District Tram- ivaijs Co. (1898) 1 Ch. 183; Neiv Durham Salt Co. (1890) 7 T. L. R. 13; Mercantile Investment Co. v. River Plate Co. (1892) 2 Ch. 303. But see Re Hansard Puhlishing^ Union (1892) 8 T. L. R. 280. An option to call at any time for a specific amount optiou to of the mortgage debentures of a given issue in satis- ^^^^ ^'^^• faction of a debt is a good equitable security while the issue remains unexhausted and may be exercised after judgment in a debenture holders' action: Pegge v. Neath District Tramways Co. (1898) 1 Ch. 183. Prospectus. Bonds are frequently offered to the public by pros- pectus. For a discussion of the law rehiting to pros- pectuses see the note to s. 43, wliich applies to bonds as well as shares. If there is a dispute as to the meaning of certain provisions in bonds the prospectus or tlie application may not be looked at to ascertain it: Teivkeshury Gas Co. (1911) 2 Ch. 279, (1912) 1 Ch. 1 . The rights, if any, of the purchaser of such bonds must be asserted by way of a claim for rectification of tlie bonds, per Parker, J., ihid. at p. 283. Series of bonds. Where bonds are secured by trust (\vv\\ crcnliiig a charge or where the bonds themselves contain a charge it is usual to insert a provision that all l)onds of the issue shall rank pari passu. Where tliis is not done ;iiiS(i DOMINION COMPANIKS ACT. Sects. bonus out of the bonds and securitios he was to receive ^^•^^^- 1^11 tlio transfer of the properties to the new company. Bonds. '^'^1*-' defendant deducted from the bonds handed over purcEe.*'' ^'' ^^^^' phiintiffs a rateable contribution towards this bonus, it was liekl tliat tlie defendant was not entitled to make such a deduction and the judgment of the court below was sustained holding the defendant liable for the cash value of the bonds and shares unaccounted for calculated on their selling value at the time of default. Duff, J., delivering the judgment of the court said, that if the defendant was to be considered as a trustee WTongfully withholding the bonds, the meas- ure of damages was to be calculated on the assumption that they w^ould have been disposed of at the best price obtainable; if he was a contractor who had failed to deliver securities, the measure of damages was the selling price at the date of the breach. See also Nant- Y-Glo (& Blaina Sc. Co. v. Grove (1878) 12 Ch. D. 738, at p. 750. Where a resale of the bonds is contemplated the measure of damages may be the loss of the sale. In England the hardship arising from the rule that a contract to purchase bonds is not specifically enforce- able has been removed by statute, s. 105 of the Imperial Companies (Consolidation) Act, 1908, and the same is true under the British Columbia Com- panies Act R. S. B. C. c. 39 s. 113. Bonds secured by a charge of the company's lands which gives a power, on default, of sale of the mort- gaged property are an interest in land within s. 4 of the Statute of Frauds and contracts relating to such bonds must be in writing: Driver v. Broad (1893) 1 Q. B. 539; McKinnon v. Doran, supra. But see now s. 69A, (1) (iii.). It is not uncommon for a company to offer a bonus of its common shares to purchasers of bonds as an inducement to subscribe and such bonus is an essential consideration in such circumstances and the illegality or nullity of the issue of common shares will avoid the subscription: Dorchester Electric Go. v. King (1915) 24 D. L. R. 373 ; 48 Que. S. C. 471. BONDS. 387 Where bonds are purchased subject to the approval Sects, of the purchaser's solicitor such approval is a condi- 69-69m. tion precedent to the agreement becoming binding on the purchaser: Canada Investment v. Scotstoivn (1915) 48 Que. S. C. 97. (f) Debenture stock. The question is frequently asked, having regard to Debenture the name debenture stock, whether it is possible to ^ °*^ ' confer upon the purchasers ' of debentures, bonds or debenture stock a power to act also as shareholders and thereby to assume control of the company in case their securities are in default. Certain of the statutes, among others, the Railway Act, confer upon debenture holders this right, but unless the power is specially given by the statute and it is not so given under the Dominion Act, debenture holders as such have no such right. This object can, however, be accomplished by a transfer by the promoters or other large shareholders to a trustee of a portion of their own shares fully paid- up, to be held in trust for the promoters until default occurs upon the debentures, bonds or debenture stock, and after that to be held in trust as regards its voting power for the holders of debentures, bonds or deben- ture stock. By means of such a voting trust the security holders can elect a majority of directors and control the management of the company. The following description of the difference between debentures and debenture stock is taken from Pal- mer's Precedents, 11th ed.. Part III, at page (i : — "(1) 'Debenture' is the name given to an instru- ment embodying a contract, usually under seal. (2) Debenture stock is the name given to a debt usually created by a trust deed or debenture." Debenture stock is, to use Lord Justice Liiidley's words, "l)orrowed capital consolidated into one mass for the sake of convenience." Hence, the two things cannot be compared; they compared differ as much, inter se, as a mortgage deed and a mort- J'Jbiutures. gage deht. But if the (juestion be varied to [and one is asked J, "what is the difference between the position ooo bS DOMINION COMPANIES ACT. Sects. ol' u (leboiiture lioklor and that of a dobenture stock- 69-69m. holder," the answer is that the terms "debenture )ebenture hoklers " and " debenture stockliolders " do not tock. import any substantial difference ol' position. Thus : — (1) As to time of payment: — Money secured by debentures is g"enerally made payable at a fixed date, say, five, ten or twenty years from the date of issue., and although so-called perpetual debentures are some- times issued, they are exceptional. On the other hand, debenture stock, though sometimes made payable at a fixed date, is more commonly made payable only in the eyent of a winding-up, or of default by the company in paying the interest for, say six months, the company reserving power to itself to redeem after a term, say, of ten or twenty years on giving six months notice of its intention to redeem, (2) As to payment of interest: — Here there is no practical difference. In each case the interest is usually paid by warrant, or on presentation of coupons issued with the debentures or with the stock certificates. (3) As to security:— In most cases the security is practically the same in substance, though the form differs slightly. Debentures are commonly secured by a charge appearing in the debentures themselves, sometimes by trust deed, which is also the instrument which constitutes the stock. (4) As to transfer : — The mode of transfer of both is substantially the same — if the debenture or deben- ture stock is to bearer, the transfer is by delivery; if to registered holder by instrument in writing. But in the case of registered debentures the transferee keeps the original debenture; w^hereas in the case of regis- tered debenture stock the transferor's certificate of title is given up to the company to be cancelled, and a new certificate is issued to the transferee just as in the case of a transfer of shares. (5) Divisibility of stock: — A debenture is always for a fixed sum, say £100, of which the total amount to be secured by the series is a multiple and the fixed sum is generally (but see p. 284) indivisible, whereas, de- benture stock, unless it is otherwise provided, can be BOXDS. 389 transferred in any amounts, e.g. £550 or £71 or £13-10s. Sects. and several small holdings can be consolidated into one 69-69m. large holding, a single certificate being obtained for the Debenture aggregate amount, though to prevent complications it ^'^^'^• is commonly provided that a fraction of £1 or £5 or £10 shall not be transferable. . . . No doubt it is possible so to frame a debenture that a fraction of the amount thereby secured shall be transferable, and so that several debentures may be consolidated into one ; but in such cases it is necessary for the company to issue new debentures or a new debenture, and this involves the payment of special stamp duty, whereas a debenture stock certificate to registered holder is exempt from stamj) duty, at any rate if framed in 11 le ordinary way. (6) Investors generally prefer a single certificate of title to a heavy bundle of debentures.' (g) Mortgage bonds. Where a debenture is more than a mere promise to pay and purports to confer a charge on the company's assets by way of security, such mortgage or charge may be conferred either by the debenture itself or by a covering trust deed, or by a combination of the two. The charge, furthermore, may be specific or float- specific ing. A specific cliarge, as the name implies, is one wliich ^"^^'^'se- attaches to definite and ascertained property, and excey)t in so far as the company is given the right to deal with such property its power to do so ceases on the giving of the charge; it is an absolute assignment by way of moi-tgago and its subject matter becomes the property of the mortgagee subject to the mortgagor's right of redemption. A floating charge on the othm* Floating hand is an equital)le charge of the undertaking and '■''"'"■^^• assets oC the company for the time being as a going concern. It is of the essence of such a charge that it remains dormant until the undertaking charged ceases to be a going concern, or until tlie person in whose favor the charge is created intervenes. His riglit to intervene may, of course, be suspended by 390 DOMINION COMPANIES ACT. Sects. 69-69M. Floating oharge. Creation of. Form of words. iiiiTooiiU'iit, bill if tliero is no agToenieiit for suspen- sion lie may exorcise his right whenever he pleases after default, per Lord Macnaghten in Government Stock V. Mauila Railwaij (1897) A. C. 81 at p. 86. And the same judge in JIouMsivortli v. Yorkshire Wool- combers' Association (1904) A. C. 355, defined the term at p. 358 as follows, "A floating charge is ambulatory and shifting in its nature, hovering over and so to speak floating with the property which it is intended to affect, until some event occurs or some act is done which causes it to settle and fasten on the subject of the charge within its reach and grasp." A floating charge may be created by apt words either in the debenture itself; Re Farmers' Loan and Savings Co., Debenture Holders' Case (1899) 30 0. R. 337; Johnston v. Wade (1908) 17 O. L. R. 372, or in a covering trust deed: National Trust v. Trusts and Guarantee (1912) 26 0. L. R. 279. It is not necessary that any special form of words should be used and in Yorkshire Woolcomhers' Association (1903) 2 Ch. 284, Romer, L.J., in the Court of Appeal, said that a mortgage by a company which contains the following characteristics is a floating charge: " (1) If it is a charge on a class of assets of a company present and future: (2) if that class is one which, in the ordinary course of the business of the comj^any, would be changing from time to time; and (3) if you find that by the charge it is contemplated that, until some future step is taken by or in bc^half of those interested in tlie charge, the company ma}' carry on its business in the ordinary way as far as concerns the particular class of assets I am dealing with." Thus in Trusts and Guarantee v. Abbott Mitchell (1906) 11 0. L. R. 403, the bond mortgage of all the company's real estate and assets provided that the trustees should permit the company to continue and carry on its business and that the company might pledge or mortgage assets of a certain description. A subsequent clause provided that advances made by the trustees for bondholders should have priority over BONDS. 391 every other advance made to the company. In effect Sects, it was held that the foregoing- provisions gave the 69-69m. trustees a floating charge and that the company was entitled to create a specific charge ranking in priority. When a mortgage is made, not by a manufacturing company, but, e.g., by a theatre company, where the chattels charged would not be changed with the same frequency as they would in the case of a manufactur- ing company, it may be more difficult to infer that the charge is floating and not specific. But where such Floating a company operated a number of theatres and charged ''^'"^^' all the furniture, loose effects, plant, machinery, &c., upon various premises present and future, and the mortgage contained a provision that the company would conduct its business in a proper manner, and the company had no power to let any of the premises mortgaged without the consent of the mortgagees, it was held that this was a charge upon a class of cliat- tels, which, as to some of them would, and as to all of them might, necessarily be changed from time to time in the ordinary course of business. And, although the mortgage was not expressly in form a floating cliarge, it was held that it was not intended to interfere with the ordinary carrying on of the company's business and as far as the chattels were concerned created a floating charge only: National Provincial Bank of England v. United Electric Theatres (1916) 85 li. J. Ch. M)(y. Astbury, J., in that case remarked that if it had been intended that the charge should operate as a specific charge with regard to the chattels existing at tlio date of the mortgage a schedule of them might have been provided. When a debenture set out that the interest thei-eon was " guaranteed by the capital and assets of the company invested in mortgages upon ap])roved real estate," it was held tliat the intention was to secure payment of the princii)al and interest, to be secured on tlie capital and assets of the company, and it was held that the debentures were a charge on the assets and capital of the company and that oti a winding-up they were entitled to rank ahead of unsecured claims: Re 392 DOMINION COMPANIES ACT. Sects. 69-69M. Bonds. Floating charge. Fanners' Loan and Savings Co. Debenture Holders' Case (1899) 30 0. R. 337. ^In Panama, Sc. Co. (1870) L. R. 5 Ch. 318, where the company charged its "under- taking " with payment of the debentures issued, Gif- fard, L.J., held that the use of the term implied that the business of the company was to continue and that the charge was therefore a floating one ; see also John- ston V. Wade (1909) 17 0. L. R. 372, where the words used were "the company hereby charges with such payments its undertaking and all its property real and personal, rights, powers and assets of every descrip- tion present and future, including its uncalled capital." Such a charge leaves the company at liberty to create specific mortgages ranking in priority to it : Government Stock v. Manila Ry. (1897) A. C. 81, and where purchase money is advanced on the security of the property purchased the lender takes priority over an earlier floating charge: l7i re Connolly Bros., Wood v. The Company (1912) 2 Ch. 25, where the lender's solicitor took and retained the title deeds on the con- v^eyance to the company of the property in question. So a specific assignment to a third party of book debts or of arrears of rent under leases covered by a floating- charge will take precedence over the floating charge and the receiver for bondholders: In re Ind. Coope S Co. (1911) 2 Ch. 223. Similarly, where a company mortgages its under- taking by way of floating charge which covers assets, the property in which under the terms of sale to the com- pany is to remain in the vendor until payment, on the company's failure to pay, the vendor takes precedence over the receiver for debenture holders, notwithstand- ing that the latter has no knowledge of the vendor's claim: In re Morrison, Jones & Taylor (1914) 1 Ch. 50. Commonly the right is reserved on the part of the company of dealing with its property in the ordinary course of business. As to the effect of such a clause see Cox Moore v. Peruvian Corporation Ltd. (1908) 1 Ch. 604. BONDS. 393 Notice does not affect a subsequent specific niort- Sects, gagee, Re Hamilton's Windsor Iron Works (1879) 12 69-69m. Ch. D. 712. Bonds. A floating charge \\i\\ also give the debenture Floating holders priority over execution creditors, Re Standard Mfg. Co. (1891) 1 Ch. 627; Re Opera Lim. (1891) 3 Ch. 260; Davey S Co. v. Williamson (1898) 2 Q. B. 194. It will also give priority over a creditor who gets a garnishee order, if a receiver is appointed before creditor obtains payment: Cairney v. Buck (1906) 2 K. B. 746. Under sections 69K of the Act, and 70 of the Wind- ing-up Act, claims which are made preferential under the Winding-up Act, are entitled to priority over a pi.(,i,ibition floating charge when a receiver is appointed or the against bondholders take possession, even though the company prior is not at the time in course of being wound up. charges. The clause creating a floating charge may contain words which prohibit the company from making any mortgage or charge in priority thereto. Where the debenture charges specified assets, with a provision, "■ but so that the company is not to be at liberty to create any mortgage or charge in priority to or pari passu witli tlie said debentures " such words will not imply the right to create a floating charge contrary to the terms of the specific charge already given : Grif/son V. Taplin (1916) 85 L. J. Ch. 75. " Such a restric- tion will be good, except, of course, as against a mortgagee for value without notice : English & Scottish- Co. V. Brimton (1892) 2 Q. B. 700; Re Castell S Brown, Ltd. (1898) 1 Ch. 315; Re Valletort Sanitary Steam Laundry Co. (1903) 2 Ch. 654. The plea of purchase for value witliout notice must be proved in its entirety: Union Bank v. Indian and General, Etc. (1908) 3 E. L. R. 409, (1908) 40 S. C. R. 510. A company having power to do so can sell one of saic of several businesses, or its whole undertaking, notwith- standing the existence of a flonting chai-ge: Metropoli- fav Hank v. Vivian (1900) 2 Ch. 654; Th rr Borax Co. (1901) 1 Ch. 326. Wliih' t1io liconse to tiic company to 'o94: DOMINION COMPANIES ACT. Sects. carry on its business continues, a debenture holder can- 69-69m^ not require that a particuhir debt owing to the company ivmds. be paid to him : I\oh^o)i v. Smith (1895) 2 Ch. 118. A seizure under a huidkird's right of distress will take precedence over a floating charge, if exercised be- fore the security ceases to (loat: Lcc v. Roundwood Colliery (1897) 1 Ch. 373. Crystaiiiza- When the business of the company ceases, a floating floating charge crystallizes, and the rights of debenture hold- eharge. ^y^ attacli: Be Panama (1870) 5 Ch. 318; Re Farmers' Loan and Savings Co. (1899) 30 0. R. 337. The mere fact of the company being in default is not sufficient to make the charge cease to float: Government Stock v. Manila Ry. (1897) A. C. 81. The debenture holders must take some step to enforce their security, e.g., by the appointment of a receiver: Nelson v. Faher (1903) 2 K. B. 376. In the last mentioned case it was held that the hold- ers of second debentures which were expressed to be subsequent to a prior issue were not precluded from getting pa\Tnent of their debentures in cash or by set- off, while the charge in the first debenture remains un- crvstallized. The fact that the debentures were ex- pressed to be subsequent to an existing issue only re- ferred to the relative priority of the debentures as charges. The mere issue of a writ is insufficient. In Re Huh- hard S Co. (1898) W. N. 158, the company was held entitled to issue further debentures after a writ had been issued, but before a receiver had been appointed. Where an order appointing a receiver had been made but not drawn up and never became effective, a landlord's distress was held to take priority over the debenture holders: Lee v. Roundwood Colliery (1897) l.Ch. 373. And an equitable mortgage by a deposit of title deeds, coupled with a memorandum of equitable charge, is entitled to priority over a floating charge, where the mortgagee takes without notice, although the particular property is, by the terms of the debenture, prohibited from being charged by the company in BONDS. 395 priority to the debentures : Re Castell & Brown, Ltd. Sects. (1898) 1 Ch. 315. 69-69ii. A creditor who holds second debentures can set these off against a debt due by him to the company in respect of goods purchased while the company was a going concern and before the holders of prior deben- tures containing a floating charge appointed a receiver, even though the second debentures are expressed to be subject to the prior floating charge: Nelson v. Faber SCo. (1903) 2K. B. 367. 9. Trust deed to secure bonds. It is usual in this country for bonds to be secured by a trust deed, which procedure carries with it many advantages; in particuUir, the rights of the trustee, bondholders and company can be more completely defined, and furthermore where the trust deed, as is usually the case, contains a specific charge of real estate, the trust deed itself or a specific charge given pursuant thereto can be registered as an encumbrance Rog-istration against the lands affected in compliance with the pro- mortgage, visions of local registration laws. It has been held in British Columbia that a charge conferring a floating- security only, could be registered under the local land Registry Act: In re Land Registration Act (1901-4) 10 B. C. R. 370. Where the trust deed confers a mortgage of the chattels of the company, it can be and should be regis- tered as a cliattel mortgage. As this is sometimes As a chattel objected to by the company on the ground that such a "^"^'^"^se. course wouhl affect tlie company's business reputation or credit, it is important to consider tlie effect of non- registration as a chattel mortgage. In practice regis- tration as a cliattel mortgage sliould be insisted u])on. Under tlic Ontario I'>ills of Sale and Chattel Mort- gage Act, R. S. 0. (1914) c. 135 and the acts of other jiroviiices containing similar provisions, a trust deed re(iuires registration for its validity in order that it Xon-regis- may lie <'ffective as regards f/oods and cJtattels de- scribed in it: National Trust v. Trusts and Guarantee '^9^^ DOMINION COMPANIES ACT. Sects. 69-69M. Registra- tiou of trust deed as a chattel mortgage- Liquidator. Floating charge. (1912) 26 0. L. R. 2:19; Bank of Montreal v. Kirkpatrick (15)01 ) 2 0. L. R. 119. So far, however, as the subject matter charged does not answer to the description of goods and chattels ^^dthin the meaning of these Acts, the mortgage may be severed, and while it may be in- \'alid as regards goods and chattels for lack of registra- tion, it may be valid as regards other assets not coming within that description. Thus in National Trust v. Trusts and Guarantee, supra, the trust deed was held to confer a valid security with respect to book debts, because the latter were clioses in action and did not come within the description of goods and chattels. The decision followed on this point the earlier case of Kitching v. Hicks (1884) 6 0. R. 739, and Thibaudeau V. Paul (1894) 26 0. R. 375. The Ontario Bills of Sale and Chattel Mortgage Act is for the protection of creditors, and in Re Canadian Shipbuilding Co. (1912) 26 0. L. R. 564, Riddell, J., held that the protection did not extend to the liquidator of the company. Consequently it was held that the liqui- dator had no locus standi to impeach a bill of sale for want of registration, the dictum to the contrary in Re Canadian Camera Co. (1901) 2 0. L. R. 677 being dissented from. This decision is in conflict with the decision of Teetzel, J., on this point in National Trust V. Trusts and Guarantee, supra, which was followed in Alberta in Imperial Canadian Trust Co. v. Vallance (1915) 24D. L. R. 241. If, however, there is no covering trust deed and the charge is contained, as it may be, in the debentures themselves, the Bills of Sale and Chattel Mortgage Acts will not apply and registration is not necessary for the validitv of the security: Johnston v. Wade (1908) 17 0.L.R.372. It is arguable that different considerations apply to a floating charge. A floating charge transfers no title to any property in existence or to after acquired goods, and confers upon the chargee no right to take posses- sion or interfere with the subject matter of the floating charge except in the event of default, but in National TRUST DEED. 397 Trust V. Trusts and Guarantee (1912) 26 0. L. R. 279, Sects. the floating charge was held invalid except in so far as 69-69m. it related to book debts. Where parties intend to give security by way of a chattel mortgage within the meaning of the Alberta Bills of Sale Ordinance and the instrument is defective for non-compliance with the Act it cannot be justified as creating a floating charge, and is void as against creditors : Imperial Canadian Trust Co. v. Wood Val- lance (1915) 24 D. L. R. 241. Section 82 (2) of the Ontario Companies Act, R. Registra- S. 0. 1914, s. 178, requires a duplicate original of every ontark) Act. mortgage securing bonds, debentures or debenture stock to be filed in the office of the Provincial Secretary. Probably this provision is directory only and not im- perative, see Wright v. Harton (1887) 12 App. Gas. 371, a decision under a similar provision of the English Companies Act then in force. Although it is difficult to see how the Ontario Act can affect Dominion com- panies it is the practice to file a duplicate original of the trust deed as an additional precaution where On- tario assets are charged. If it is desired not to register the trust deed as a chattel mortgage either one of the following plans may be adopted ; but it must be remembered that there is no certainty of absolute security without such registration and in view of the change in the practice in this regard it is difficult to see how the registration of a bond mort- gage as a chattel mortgage can injuriously affect the credit of a company. (1) Tii tlic trust deed create only a fixed cliarge on real estate and fixtures making no reference to any floating cliarge. Then in the bonds tliemselves insert a clause creating a floating charge. Possibly the case of Johnston v. Wade aj^plies so as to give llic ])onds validity without registration notwith- standing the existence of a covering trust deed capable of registration under the Bills of Sale and Chattel Mortgage Acts. (2) Or else, have the li'ust deed con- tain the usual provisions as to floating charge and in addition have the company execute a collateral dfben- o[)S DOMINION COMPANIES ACT. Sects. tiirc itself containing a floating charge. It is an addi- 69-69M. tional precantion to reqnire the execution of such a collateral debenture even though the principal trust deed is registered as a chattel mortgage. Kofristration Registration of the prescribed particulars of any Actl. 09 mortgage or charge is now required to be made by the A (1) ni. company in the Department of the Secretary of State. This provision is taken from the Imperial Companies (Consolidation) Act, 1908, s. 93. Non-registration makes the mortgage or charge void ''against the liqui- dator and any creditor of the company," s. 69A (1), but it remains good as against the company. A credi- tor, to take advantage of the section, must be a creditor in relation to the mortgagor : Dalton v. Dominion Trust Co. (1918) 3 W. W. R. 42 (B.C.). The certificate of the Secretary of State is conclusive evidence of compliance with the section: Yolland Husson S Co., Ltd. (1908) 1 Ch. 152; Cunard Steamship Co. v. Hopwood (1908) 2 Ch. 152. Where the particulars of the trust deed itself are registered, specific charges given pursuant thereto are not required to be registered : Cunard Steamship Co. V. Hopwood, supra. The company is also required to endorse a copy of the certificate of registration on the bonds issued, keep a register of mortgages and comply with the other statutory provisions of ss. 69A-ff. The provisions of the Act cannot be evaded by taking an assignment absolute in form, but intended to operate as a mortgage : Re Metropolitan Mortgage and Savings Co. (1915) 7 W. W. R. 1204, decided under s. 102 of the British Columbia Act. See also Wickson Co., Ltd. V. Dominion Creosoting Co., Ltd. (1917) 55 S. C. R. 303. The equitable doctrine of notice does not apply under the section, so that a duly registered bond takes priority over an unregistered mortgage, even where the bondholder took his bond with notice of the prior mortgage: In re Monolithic Bldg. Co. (1915) 84 L. J. Ch. 441; (1915) 1 Ch. 643. Form of A trust deed to secure debentures follows, to some trust deed, extent, the ordinary form of mortgage with power of BONDS. 399 sale, but the standard forms now in use contain many Sects. and elaborate provisions for the protection of the 69-69m. bondholders, the trustee and the company. An acceleration clause, similar to that in a mort- gage, is frequently inserted, and is recognized as effec- tual by the courts : WaUingford v. Mutual Society (1880) 5 App. Cas. 685. As to the effect of trust deeds to secure the payment of mortgage bonds, see Hatherton v. Temiscoiita By. Co. (1897) Q. R. 12 S. C. 481; Wallbriclge v. Farrell (1890) 18 S. C. R. 1 ; Redfield v. Wickha7n, 13 A. C. 467. (1) Position of, powers and duties of the trustee. Where bonds are secured by a covering trust deed a trustee is therein appointed, in whom the title to the assets specifically charged is vested. The trustee ap- pointed is commonly a trust company and it is im- portant that the trustee should be authorized under the local laws of the province in which the assets are situated to hold such assets as mortgagee and be en- titled to enforce by action the trusts of the mortgage. The Extra-provincial Corporations Acts of the various provinces make the obtaining of a license a condition precedent to the right to hold lands and non-compli- ance with this requirement would seriously affect the security of the bondholders. In a New Bruns^\^ck case, however, under such circumstances, bondholders were held entitled in equity to a first charge on the assets mortgaged against the comy)any and its liquidator: Harrison v. Nepisiguit Lumber Co. (1912) 11 K. L. R. 314. Moreover, in all the jnovinces an unlicensed foreign corporation is debarred from suing in the local courts, and while this prohibition is ineffective against a Do- minion company, John Deere Plow Co. v. Wharton (1915) A. C. 330, it is good against other foreign com- panies: Assinihoia Land Co. v. Acres (1916) 10 O. W. N. 328. Under most of ilic Extra-provincial Corpora- tions Acts the mortgage would not be void but only unenforcea])le and on com])liance with the statute the right to sue would arise: SihUIi v. ]]'csfrrn Canada 41K) DOMINION COMPANIES ACT. Sects. 69-69M. Position of, powers and iluties of trustee. Flour Co. (1911) 17 W. L. R. 531, a case under tlie Al- lu'rta Foreign Companies Ordinance. The duties of the trustee and its rights and powers Mith rei'erence to the mortgaged assets are defined by the terms of the trust deed. These do not compel the trustee to intervene for the purpose of protecting or enforcing the security except on requisition of the bondholders and tlien only upon proper indemnifica- tion. Modern trust deeds contain elaborate provisions for the protection of the trustee. In particular, liabi- lity for acts of agents selected with reasonable care, and responsibility for anything except wilful miscon- duct, gross negligence or intentional breach of trust on the i^art of the trustee, are excluded. The importance of such a clause is illustrated by Stothers v. Toronto General Trusts Corporation (19i9) 44 0. L. R. 432. Where the trust deed provides for a sinking fund to be applied in the purchase of bonds which are offered for redemption at the lowest price, the lowest price means the lowest average price obtainable. And if the trustee, by paying a higher price for a block of bonds w^hich will exhaust the moneys at its disposal, thereby succeeds in redeeming a larger number of bonds than if it had accepted a lower tender for a small block and had had to pay more for the balance required to ex- haust the moneys in its hands, then the trustee is entitled to reject such lower tender: Whicher v. Na- tional Trust (1912) A. C. 377. A trustee for bondholders may become a purchaser as such trustee on the sale of the mortgaged assets : Royal Trust Co. v. Baie des Chaleurs Ry. (1907-12) 13 Ex. Ct. Rep. 1. The mortgagee must protect to the best of its ability the security it has taken for the bondholders, and there- fore may bring an action to enforce the trusts of the mortgage: Hatherton v. Temiscouta Ry. (1897) Q. R. 12 S. C. 481. As to the custody of title deeds, there is no implied covenant on the part of a mortgagee to take reasonable BONDS. - 401 care of them during tlie continuance of the security: Sects. Gilllgan v. National Bank (1901) 2 Jr. 513. " 69-69m. The company should covenant to pay the trustee's Remuuera- reasonable remuneration, and the trust deed should '^''"" also provide that this is to be paid out of the mortgaged assets, otherwise the trustee may fail to obtain priority over tlie bondholders for its remuneration out of pro- ceeds paid into Court on the sale of the assets in a debenture holders' action: In re Accles, Ltd. (1902) 51 W. R. 57. It is important that the remuneration should be expressed to continue until the assets are realized: Paul v. Piccadilly Hotel, Ltd. (1911) 2 Cli. 534. Where a receiver is appointed the services of the trustee in the ordinary course of things come to an end and remuneration will not be continued : In re Locke S Smith, Ltd. (1914) 1 Cli. 687. But in every case it would appear to be a question of the proper construction of the trust deed ; and where the tiiist deed provided for the payment of a yearly sum to the trustees for their services as trustee during tlie continuance of the security, it wa^s held, that not- withstanding the appointment of a receiver under a j)rior trust deed, the sale of the company's property, tile payment otf of the first mortgage debentures and the payment into Court of the balance of the proceeds, the trustees were entitled to their remuneration during the coiitiiuiance of the security: In re British Consoli- dated Oil Corporation (1919) 88 L. J. Cli. 260. As to the i)riiiciples on which remuneration has been awai'dcd l)y tlie Court see Toronto General Trusts v. Central Ontario (1905) 6 O. W. K. 350. See also on remuiiei-ation of the trustee, Hanson v. Montreal Park and Island By. (1902-3) 5 (^)ue. P. R. 355; Royal Trust Co. V. Atlantic and Lake Superior By. (1907-12) 13 Ex. ( 't. Ref). 42, ;it j). 60. A trustee may sue the com])any for its own i-emuncration without obtaining authoriza- tion from the bondholders: Ilntherton v. Temiscouta (1897) Que. 12 S. C. 481. n.c.A.— 26 -^■^'- DOMIMON COMPANIES ACT. (2) Interest. Sects. it is advisable for the trust deed to provide that in- 69-69M. terest shall be payable at the agreed rate both before aud after maturity and before and after default, other- wise interest will only after maturity be allowed as damages and will be computed at the statutory rate which is five per cent, per annum: E. S. C. (1906) c. 120, s. 3; People's Loan and Deposit v. Grant (1890) 18 S. C. R. 262; Plenderleith v. Parsons (1907) 11 0. L. R. 619. Where a rate higher than the statutory rate is contracted for it can be recovered : Middleton v. Scott (1902) 4 0. L. R. 459; Pringle v. Hutson (1909) 19 0. L. R. 652, but the provision must be specific. " Until paid" or "fully paid and satisfied" are insufficient. This has been held to mean up to the day fixed for pay- ment of principal, and not to carry the implication that subsequent interest is to be paid at the same rate: People's Loan and Deposit Co. v. Grant (1890) 18 S. C. R. 262. Where the trustee under a mortgage to secure bonds makes a declaration under an acceleration clause call- ing in the principal and interest, it has been held that interest at the rate provided for and not at the statu- tory rate w^as payable after the date of the declaration. The mortgagor by the interest coupon expressly promised to pay a specific sum of money on a specified date at a specified place, and the rate of interest was not affected in any way by default occurring within the period covered by the agreement for interest. The debt was not being detained any more after the declara- tion than before and it is only where the party is de- taining the debt beyond the period during which the rate of interest is agreed upon that the statutory rate applies: Eastern Trust v. Cushing Sidphite (1906) 2 E. L. R. 93;3N. B. Eq. 392. Where a judgment has been recovered for principal interest and costs the original debt is merged in the judgment and interest at the statutory rate only is allowed: European Central Ry. (1876) 4 Ch. D. 33. A covenant to pay interest may be so expressed as not to BONDS. 403 merge in a judginent, e.g., a covenant to pay interest Sects, so long as any part of the interest remains due either 69-69m. on the covenant or on a judgment, per Fry, L.J., in Ex parte Fewings (1884) 25 Ch. D. 338, at p. 355, and see In re Agricultural Cattle Insurance Co. (1876-7) 4 Ch. D. 34n, and Popple v. Sylvester (1883) 22 Ch. D. 98. In a winding-up a bondholder can only prove in- terest to the date of tlie winding-up: Re Winding-up Act and Summerside Electric (1908) 5 E. L. R. 129, 139. Coupons. It is usual to make the interest on bonds payable by coupons to bearer, and where this is done such coupons are negotiable securities: Toronto General Trusts v. Central Ontario Ry. Co. (1905) 10 0. L. R. 347; Mc- Kenzie v. Montreal and Ottawa Ry. (1878) 29 U. C. C. P. 333 : Connolly v. Montreal, Sc, Ry. Co. (1901) Q. R. 20 S. C. 1. A coupon detached from the bond to which it relates does not lose the benefit of the mortgage lien : Trusts and Guarantee v. Grand Valley Ry. Co. (1919) 44 0. L. R. 398, 412. The holder of detached coupons can sue on them without being at the same time holder of the bond : McKenzie v. Montreal, &c., Co., supra. The holder, however, takes subject to the terms of the trust deed, e.g., that no action shall be brought except by the trustee: Levis County Ry. v. Fountaine (1904) Q. R. 13 K. B. 523. Coupons on bonds secured by a trust deed partake of the nature of a specialty nnd [ire barred in twenty years: Toronto General Trusts V. Central Ontario Ry. Co. (1903) G O. L. R. 534; (1904) 8 0. L. R. 604. As to tlie circumstances undci- wliich tlie acquisition nnd payment of coufjoiis will have tlie effect of ])re8erv- ing tlie lien ;iii(l the right to rank with the bond for interest j)ayjiu'Jits; see Trusts and Guaraiilee Co. v. Grand Valley Ry. Co., supra, and cases cited. Bond interest is payable whether there are profits of not unless it is expressly provided that interest shall be payable out of profits only. Such bonds are called ** income bonds." Where interest is payable out of net -tlU hO.MlMON COMPANIES ACT. Sects. prolils only tlie C()iii[);iiiy is iiol entitled to carry tlie net 69-69m. profits t'orwnril, but must sot aside so much as is neces- sary for tile maiiiteuaiiee of tlie security and use the balance in i)a>inent of interest on the bonds: Heslop v. Paraguay Cnilral Hi/. (1910) 54 S. J. 'J3-4. If the assets of a comi)any are insufficient to pay in full the principal of the bonds and arrears of interest the assets ought to be distributed rateably according to the amounts due for principal and interest although some of the bondholders have been paid interest down to a later date than others. The latter are not entitled to any preferential payment of arrears : In re Midland Express (1914) 1 Ch. 41. From the time when the security crystallizes there can be no priority among tiie bondholders, per Swinfen Eady, L.J., at p. 49. (3) Redemption. Bonds may be perpetual, redeemable on notice or may be for a fixed number of years. A company would Redemption. Hot have power to Issuc irredeemable bonds in the ab- sence of such a provision as is contained in s. 69 (3) : In re Southern Brazilian Rio Grande del Sul lly. Co. (1905) 2 Ch. 78. The use of tlie term "irredeemable" usually means that the company has no power to redeem, but, if the context so requires, may mean that the bondholder cannot claim redemption: Willey v. JosepJi Stock S Co. (1912) 2 Ch. 134, note. Bonds for a fixed term of years are not redeem- able before maturity at the option of the company without the consent of the holders. Where a company as an alternative to making a fixed portion of its bond indebtedness repayable annually (which can be accom- plished by means of the issue of "serial" or "instal- ment" bonds) desires to have the option to retire annually a proportion of its bonds, the trust deed may contain" special clauses relating to the redem])tion of bonds, providing for the creation of a sinking fund and the retirement of a certain proportion of bonds annu- ally by means of drawings. BONDS. 405 Where the trustee, under a provision in the trust Sects, deed, is directed to purchase bonds offered to it for 69-69m. redemption at the lowest price, that means the price ^ whicli is k)west on the average as applied to the whole block purchased: National Trust v. Whicher (1912) A. C. 377. Where bonds ar^ expressed to be "redeemable" at a certain date it means that the company may redeem them if it so desires, but is not obliged to do so: Morrison v. Chicago and X. W. Granaries (1898) 1 Ch. 263. Where debentures contained a covenant for re- demption *'on or after" a certain date, with a further provision that the particular debentures to be paid off would be determined by ballot and that six months' notice would be given by the company of the deben- tures drawn for pajonent, the company having failed to hold any ballot, one of the debenture holders gave the notice and it was held that the principal moneys be- came presentlv due and payable : In re Teivkesbury Gas Co. (1911) 2 Ch. 279. Where the principal is made to fall due on the occur- rence of a certain event, e.g., a winding-up, the com- pany or the g-uarantors of the bonds are entitled to ledeeiii, and the bondholders, in the absence of other provisions in the bonds, have no option to refuse re- denijition : Consolidated Gold Fields of South Africa v. Summer & Jack East, Lim. (1913) 82 L. J. Ch. 214. The ordinary rule of "once a mortgage always a oioKginK th.- mortgage" and the principle tliat anv stipuhition *^'agee. They may sue the company on the !m .u'fiuu"^ covenant for repayment, or they may apply to the court for the appointment of a receiver, or may bring action of foreclosure. The latter remedv will onlv be sTanted if all the bondholders are before the Court: In re Con- fin cut al Oxyqen Co. (1897) 1 Ch. 511. The usual ac- celeration clause, whereby in the event of default for a stated period the whole principal sum becomes due, is a cumulative provision and does not interfere with the right to foreclosure which becomes immediately exer- cisable on the occurrence of default: Farmers' Loan and Trust v. Nova Scotia Central (1891-2) 24 N. S. R. 542. Immediately on default the trustees for bond- holders can sue, even though there may be other reme- dies provided in the trust deed which are not available until after a stated period has elapsed: Allan v. Mani- toba and Northivestern (1894) 10 Man. L. R. 106. The trustee for bondholders may, if the right is given by the trust deed, enter and take possession and sell. Ill ]Vadc v. Crain (1915-16) 35 0. L. R. 402, an un- paid vendor of lands, whose agreement permitted him on default of the purchaser to enter and take posses- sion, on default occurring took possession not only of the lands but also of certain chattels which were claimed in an action by the liquidator. The vendor attempted to justify the taking of the chattels under the terms of a charge conferred by bonds of which he held some $24,000 out of an issue of $100,000. The Appellate Division held that the attempted justification failed and that in the absence of the other l)ondholders who were not before the Court there should be no adjudica- tion on the right to prove on the bonds in the winding- up. The judgment of the Appellate Division was affirmed by the Supreme Court of Canada (1918) 55 S. C. R. 208. A bondholder may, if principal or interest is unpaid, file a winding-up petition: Boroufjlt of Portsmouth BONDS. • 409 Tramways (1892) 2 Ch. 362 ; and a bondholder who has Sects, brought an action and obtained the appointment of a 69-69M. receiver is not thereby disentitled from petitioning to wind up, ihid. A bondholder whose principal or in- terest is not due is not a creditor entitled to petition for a winding-up order: In re Melhourne Brewery (1901) 1 Ch. -t53. The bondholders need not, however, wait until the jeopardy. events on wliich the mortgage becomes enforceable occur. If, for example, judgments have been recovered against the company and executions are likely to issue the bondholders are entitled to have a receiver ap- pointed even though the company is not in default: Griyson v. Taplin (1916) 85 L. J. Ch. 75: In re London Pressed Hinye Co. (1905) 1 Ch. 576; or where the com- pany proposed to distribute its reserve fund which was practicallv its onlv asset among the shareholders : Tilt Cove Copper Co. (1913) 2 Ch. 588. This is called the doctrine of '* jeopardy," and the principle on which the Court intervenes is that the bondholders need not stand by and see the assets seized by unsecured creditors. It is not sufficient for the plaintiff merely to show that the proceeds of the assets if realized would be insufficient to pay off the bonds: In re New York Taxicab Co. (1913) 'l Ch. 1; • but see Braunstein v. Marjolaine (1914) 58 Sol. J. 755, where, however, there were other circumstances pre- scTit. A mortgagee is entitled as of right to a receiver, although judgment creditors may already have had one of their own a[)pointed: Allan v. Manitoba (1899) 10 Man. L. R. 101. The mere fact that the companv has gone into li({ui- kiTwi of dation does not prevent a boiidliolder h'oni hringing an action to enforce his security: In re Lanf/endale Cotton Spinning Co. (1878) 8 Ch. 1). 151; Imperial Paper Mills v. Qurhrr Bank (1910) 2 O. W. N. 1500, 1502. Prima facie a mortgagee is ciitifled lo i)ossession of the assets mortgaged to him ;iii(I ;i li(|nid;itor ought not, by taking possession, to interfere with the seciiii1> : 410 DOMINION COMPANIES ACT. Sects. Sliorht'cd v. Raven Lake (1909) 13 0. W. E. 720. It 69-69M. ^vas lield in tlie same case that if the parties could not Enforcing ai^ree as to what was si)ecilicaily covered by the mort- oif cfefauit? f^'^S"^ ^1^<^ phiintiff might have leave to bring an action or an issue might be directed for this imrpose. If a mortgagee has already commenced an action and a winding-up intervenes he should have leave to proceed except under special circumstances, or unless the same relief is given to him in the winding-up as he would obtain in the action: Re David Lloyd & Co. (1877) G-Ch. D. 339. Leave wdll usually be granted as a matter of course, per Meredith, C. J., in Re Brampton Gas Co. (1902) 4 0. L. R. 509, at p. 518, and Capital Trust Corporation v. Yelloivhead Pass Coal Co. (1916) 27 D. L. R. 25 ; but see Re International Trap Rock Co., Ltd. (1915) 8 0. W. N. 599. There a motion was made for leave to proceed to enforce a mortgage, a winding- up having intervened. Lennox, J., made an order allowing the applicants to proceed to enforce their mortgage after the expiration of three months, subject to tlie right of the liquidator or an unsecured creditor or a shareholder to apply for an extension of time. The judge held that he had a discretion to refuse leave to ])roceed, adopting the reasoning of Kay, J., in In re Henry Pound (1889) 1 Megone 279, and not following Re David Lloyd S Co. (1877) 6 Ch. D. 339. In In re Excelsior Brick Company, an unreported case decided by Middleton, J., June 22, 191 G, an a[)plication was made by a bondholder on behalf of himself and all other bondholders for the enforcement of the bonds and a re- ceiver. The company was in liquidation. The liquida- tor had been appointed receiver under a permissive condition authorizing the majority to do so. There were no assets of the company other than a certain judgment which the liquidator had obtained in an ac- tion then in appeal and the proceeds of an encumbered farm when sold. Under these circumstances, as the liquidator would hold all assets subject to the bond- holders' rights the judge held that it was inadvisable for the estate to be put to the expense of an action. It was further held that the estate being realized by the BONDS. 411 liquidator in both capacities any question raised as to Sects, the bondholder's rights to participate in the assets 69-69m. might have to be decided by an action if and when the issue definitely arose and there were assets to which its decision might be applied. Re International Trap Rock Co., Ltd., appears to be in conflict mth an earlier decision of In re British Columbia Tie and Timber Co. (1908) 14 B. C. R. 81, where Clement, J., following Re David Lloyd S Co., dis- missed a motion by a liquidator for an order to re- strain a mortgagee in possession from proceeding to sell, and thought that as the mortgagee's action did not come within any one of the classes of "proceeding" specified in s. 23 of the Winding-up Act, section 22 should not be extended to cover any proceeding outside those classes. But qucere, whether this decision is good law. It has been held that after a winding-up order property of a company can not be sold for taxes : ScJiool Commissioners of Hochelafja v. Montreal Abattoir (1887) 3 M. L. R. (Q. B.) 116. Where the bondholders have in an action obtained the appointment of a receiver, and a liquidator is sub- sequently appointed in a winding up, the receiver will not be displaced unless there is some strong reason for so doing: Strong v. Garlyle Press (1893) 1 Ch. D. 268. In England the Court will, as a general rule, appoint the liquidator in place of the receiver to act as receiver as well as liquidator where a debenture holder has got an order from the Court appointing a receiver : In re Joshua Htnbbs, Ltd. (i 891 ) 1 Ch. D. 475 ; but not where the receiver has been appointed by tin' debenture hold- ers themselves under a power to do so : Re Pound, Son & Hutchings (1889) 42 Ch. D. 402, unless the po.ver has not been exercised bona fide: Maskelyne v. British Typeivriter (1898) 1 Ch. 133. AVliere a majority of the deheiilure iiolders iiiidei- a j)o\ver contained in tiie debentures had appointed the liquithitor of the company as receiver and an applica- tion was sul)sequent]y made for the appointment of an- other receiver, Britton, .1., in He Civil Service Co- ■Hi! DOMINION C'OiM I'ANIES A(^r. Sects. opcrafirc Siippli/ JssociatioH (191()) 10 (). W. N. 143, 69-69m. was of the opinion Hint tlic majority ol' the dobeiitiire Kiitomus liolders coiikl ai)i)oiiit another receiver in i)lace of the Im\Suit'^ li(lui(lator and that the Court was not debarred from api)ointini»- another person because oF the former action of the majority. See also lunik of Moulrcal v. Mariliiue SulpJiide Fibre Co. (1901 ) 2 N. B. Eq. 328, where the liquidators under a winding-u}) order granted subsequently to the appointment of a receiver disputed the validity of the mortgage and the extent of the property covered and the Court held that the receiver (who had been ap- pointed before the winding-up order, but after the ap- plication to wind up) should not be discharged but the order appointing the receiver was varied and confined to the property described in the mortgage. Where the majority was made up in part of deben- tures equitably mortgaged to tlie plaintiffs who had not been consulted in making the appointment, it was held that the appointment had not been properly made and that a receiver should be appointed by the Court: III re Sloggcr Automatic Feeder Co. (1915) 84 L. J. Ch. 587. (5) Who may exercise rem-edies on default. It is the right of the bondholders themselves to enforce the security in the absence of a contrary pro- vision in the trust deed, and the action may be brought by a bondholder suing on behalf of himself and all other bondholders making the trustee a co-defendant with the company. It is usual, however, for the trust deed to curtail the right of bondholders to take proceed- ings and in every case the terms of the document must be looked at to ascertain the bondholders' rights in this regard. Thus, in Levis County By. v. Fountaine (1904) Q. R. 13 K. B, 523, where the trust deed provided tliat ''any proceeding for the purpose of enforcing the prin- cipal and interest" of the bonds should be initiated by the trustee in its own name, it was held that such pro- vision deprived the bondholders of the right of suit and was binding on a person who had acquired coupons BONDS. 413 wliicli were held to be subject to the covenants con- Sects, tained in the bonds. A contrary principle was stated 69-69]\r. in Sltaughuessy v. Imperial Trust Co. (lOO-l) 3 N. B. Eq. 5, though the Court in that case held that there was evidence of refusal by the trustee to take proceedings. In Clearij v. Brazil Ry. (1916) 85 L. J. K. B. 32, where the trust deed contained a common provision to the effect that no bondholder should have the right to institute any suit or proceeding for the execution of the trusts of the trust deed, that was held not to disen- title a bondholder from suing for arrears of interest on the covenant contained in the bond and the coupons attached. The usual clause in a trust deed authorizing the trustee to take proceedings on requisition of the l)ondholders will not prevent trustee from suing for its remuneration without having first obtained authoriza- tion from the bondholders: Uatherton v. Temiscoiita By. Co. (1897) Q. R. 12 S. C. 481. (6) Receivers. A receiver may be appointed by the bondholders Receiver themselves or by the trustee where there is a power ylUJ^J."*^^ given in the bonds or covering trust deed, if any; or by rower, the Court in a debenture-holders' action. The circum- stances under which the Court will appoint a receiver at the instance of the bondholders have been considered above. Very different consequences Mow from the two modes of ai)i)ointment. Trust deeds securing bonds now ahnost invariably do, and always should, provide that the trustee may in the event of default a])point a receivcj", in wliicIi cnse tlic iiist rnnicnt itself must be referred to for the powers ;ind duties ot" the I'cceiver. Such power must be exercised bona fide, otiierwise the ^'onit will aj)point its own receiver: Mashelyne V. lirilisl, Typewriter (1898) 1 Ch. 133. Unless the power is expressly made exercisable on the property of the company becoininn- in jeopardy the liondliohlers iinist resort to the Court if a receiver is desii'ed to be ap- })ointed on such grounds. Unless the trust deed states, as it ought, that the receiver is to be deeuHd ihc agent of 414 DOMINION COMPANIES ACT. Sects. the company he will be tleeiuecl to be the ai^'ent oi" the 69-69M. bondholders, or the trustee, who will, therefore, be liable for any default on his part: Re Vimbos, Ltd., (1901) 1 Ch. 470; Bohiuson Printing Co. v. Chic, Ltd. (1905) 2 Ch. 123, where the debenture holders were held to ])e personally liable for debts incurred by the receiver. This point is important as regards remuneration, for if the receiver is the agent of the bondholders he can claim remuneration from them: Deyes v. Wood (1911) 1 K. B. 806'. But even where the receiver is the agent of the bondholders he is for some purposes the agent of the company, at all events so far as is necessary to enable him to exercise the powers conferred on him by the debentures, per Warrington, J., in Robinson v. Chic (1905) 2 Ch. 123, at p. 132. Where the receiver is expressly stated to be the agent of the company there is no personal liability of the receiver or trustee for debts incurred in carrying- on the business: Owen v. Cronk (1895) 1 Q. B. 265; Gosling v. Gaskell (1897) A. C. 575. And, though the receiver's agency ceases if a winding-up occurs, he does not, in the absence of authorization from the bond- holders, by continuing to act make the trustee liable as principal, ibid. Receiver The position of a receiver appointed by the Court bySrt^ is thus described by Haldane, L.C., in Parsons v. Sov- ereign Bank (1913) A. C. 160, at p. 167: "A receiver and manager appointed, as were those in the present case, is the agent neither of the debenture holders whose credit he can not pledge, nor of the company which can not control him. He is an officer of the Court put in to discharge certain duties prescribed by the order api^ointing him. ' ' He is not tlie agent or man- ager of the company and can not make contracts on which the company will be liable : Moss Steamship Co. V. Whinney (1912) A. C. 254; he is a principal and not an agent, per Vaughan Williams, L. J., in In re Glasdir Copper Mines (1900) 1 Ch. 365. BONDS. 415 As to the receiver's right to be indemnified out of Sects, the estate see In re Glasdir Copper Mines, supra; 69-69m. Strapp V. Bull (1895) 2 Ch. 1. The appointment of a receiver by the Court leaves Effect of the the company in existence, but deprives the company '^^^''t'je^'^^"^ of all power to enter into contracts or to alienate, company, pledge or otherwise dispose of the assets of which the receiver is put in possession. The company's powers are in abeyance: Moss Steamship Co. v. Whinney (1912) A. C. 254. The appointment of a receiver will ordinarily operate as a dismissal of the company's ser- vants: Reid V. Explosives (1887) 56 L. J. Q. B. 388; Rolfe V. Canadian Timber, dc, Co. (1906) 12 B. C. E. 363; but does not put an end to all the company's con- tracts, e.g., trade contracts. A receiver having delivered goods to a customer of the company under a contract made by the company before his appointment, assigned the amounts due for such goods to a bank, and afterwards cancelled the contract made by the company. Notice of the assign- ment to the bank was not given to the customer until after the contract had been cancelled: — Held, that in an action brought by the bank against the customer to recover the debt so assigned the customer was entitled to set off damages sustained by the canceHation of the contract: Parsons v. Sovereign Bank (1913) A. C. 160. Tlie duty of the receiver is to take possession of and Duties of tiie l)rot('ct tlic assets of the company comprised in the '^*' charge: Manchester v. Milford (1880) 14 Cli. D. 645. He is responsible for negligence in administering the estate and reasonable care and ordinary business con- liol ai'c re({uired : Plisson v. Duncan (1905) 36 S. C. R. 647. A receiver may under certain circumstances be empowered ))> tlic Coinl to Iioitow a limited sum on receiver's certificates to be a first cliarge in priority to Hie ])onds as was done in Sage v. Shore TAne (1901) 2 N. B. Eq. 321. Tie will not. however, be authorized to make large expenditnr(!S wliere it is not clearly bene- fioinl to thf ostale; see Rifchir v. Central Onfario Jfg. (1904) 7 (). L. "R. 727. 4 1 1) DD.MINION COMI'ANIES ACT. Sects. Siiico tlio {uneiuliiiy Act of 1917, receivers are re- 69-69m. quired to iile certain notices and ncconiits as ])rovi(led by s. G9C. As to duties and powers oi' receivers see furtlier Kerr on Keceivers and the annotation in (1914) 18 D. 1.. K. ;■). An action l)y a receiver is ])roperly brought in the name of the conii)any and whih' it is prudent for the receiver to obtain the Court's sanction to the institu- tion of an action it is not necessary to do so : Franco- Belgian, dc-c, Co. V. Diihuc (1918) 41 D. L. R. 711. Possession As the rccciver is an officer of the coui't it is a con- ?ec«iver. tempt of court to interfere with his possession of the assets of the company; see In re Maudslay £ Sons S Field (1900) 1 Ch. 602. As to the practice in England with regard to making an order for possession of the company's assets, see National Sc. Bank of Enfjland V. United Electric Theatres (1916) 85 L. J. Ck 106. Where the court appoints a receiver over property out of the jurisdiction lie is not put into possession by the mere order of the court, and a person who takes pro- ceedings in the foreign country against the assets is not guilty of contempt : In re Maudslay & Sons £ Field (1900) I'Ch. 602. against the receiver. Proceedings In DieJd V. Carritt (1907) 15 0. L. R. 202, leave was given by Riddell, J., to bring an action against the receivers of an Ontario company to restrain them from carrying out a scheme for a fresh bond issue, although the scheme had ])een upheld on a motion before a judge of the High Court of Justice in England. Receiver The court will in a proper case appoint a receiver 'ma'liager. to act as rcccivcr and manager. A receiver and manager is empowered to carry on the business of the company for the purpose of realization. The receiver will not be directed to manage the business unless the latter is by express terms or by implication included in the security: Whitley v. Challis (1892) 1 Ch. 64 (C. A.). The business of the company will be included BONDS. 417 in the security if the latter covers the ' ' good will ' ' of Sect. 69m. the company, and it is important that tiie trust deed should so provide. The word "property" may be suffi- cient to include the good will or business of the com- pany: Salter v. Leas Hotel Co. (1902) 1 Ch. 332; see also Peek v. Transmarin Iron Co. (1876) 2 Ch. D. 115; Makins v. Percy Ihhotson S Sous (1891) 1 Ch. 133, and Edivards v. Standard Rolling Stock Syndicate (1893) 1 Ch. 574, where receivers and managers were ap- pointed where the charge did not in terms include the good will. (7) Modification of rights of bondholders. It is usual for the trust deed to contain a provision Modification enabling a stated majority at a meeting of bondholders bondhoi^ders. to consent to a modification of the terms of the security. It may be advisable in the interests of the bondholders generally, e.g., to postpone the due date of the principal moneys or waive compliance with sinking fund provi- sions or to permit the issue of prior lien bonds. The effect of such a provision in the trust deed is in each case a matter of the construction of its terms. Bondholders may vote to promote their individual interests even though special' provision is being made with regard to the bonds held by them, if it is made openly: Goodfellow v. Nelson Line (1912) 2 Ch. 324. The conversion of redeemable into irredeemable bonds was held to be a " modification " within the meaning of the trust deed in Northern Assurance Co. v. Farn- ham (1912) 2 Ch. 125. See tlie following cases as to modification of bond- holders' rights: — Bury v. Famatima Development Cor. Ltd. (1910) A. C. 439; Mercantile Investment and General Trust Co. v. River Plate (1894) 1 Ch. 578; Sneath v. Valley Gold Co. (1893) 1 Ch. 477; Follitt v. Eddystone &c. Quarries (1892) 3 Ch. 75; Shaw v. Royce Ltd. (1911) 1 Ch. 138; Cox Moore v. Peruvian Corporation (1908) 1 Ch. G04; Re New York Taxicah Co. (1913) 1 Ch. ^; Re B. C. Portland Cement Co. (1915) 22 D. L. R. 609, nffirmod (1916) 27 V>. T. R. 726; DlrU V. CnrriH (1907) 15 O. L. R. 202. n.c.A. — 27 418 DOMINION COMPANIES ACT. Sect. 70. Dividends. Nottoim- 70. Xo (lividi'itd slinll he declared which will impair llie pair capital, capital of Ihc i()m|iaiiy. v Vj. \'1I., c. 15, s. 58. Dobtsde- 71. Tlic directors may deduct from the dividends payahlc diK-tod from to any shareholder all such sums of money as are due from him dividends. ^^ ^j^g company, on account of calls or otherwise. 2 E. VII., c. 15. s. 59. Payment of dividends generally. Procedure. Payment out of capital. Accretions to capital. English decisions. Distinction between fixed and circulating capital. Dividends on shares of companies subject to the Act. Rules. Liability of directors. Position of shareholders. Preference shares. Bonus. Tenant for life. Reserve fund. Payment of dividends generally. Payment of The proper fund for the payment of dividends is the excess of the company's earnings over the expen- ses incurred in obtaining them. But it is obvious that opinions may differ as to the items which ought to be taken into consideration in settling the two sides of the account, the balance of which may be divided as profit. Dividends may be paid before ordinary current debts : Stevens v. South Devon R. Co. (1851) 9 Ha. 313 ; Corry v. Londonderry, etc., Co. (1886) 29 Beav. 263; before the company's works are finished: Browne v. Monmouthshire Co. (1851) 13 Beav. 32; where the calculation of profits is based on an exaggerated value of assets: Stringer's Case (1867) L. E. 4 Ch. 475; Ranee's Case (1871) L. R. 6 Ch. 104; before organ- dividends. DIVIDENDS, 419 ization expenses are paid: Bale v. Cleland (1864) 4 F. Sees. 70-71. & F. 117; Bardwell v. Sheffield IVaterworks Co. (1872) L. E. 14 Eq. 517 ; where there has been no provision for replacing wasting capital: Lee v. Neufchatel Asphalt Co. (1889) 41 Ch. D. 1. And where capital expenses have been paid out of income, they may afterwards be charged to the capital so as to increase a dividend : Mills V. Northern Raihvay of Buenos Ay res (1870) 5 Ch. 621. When a dividend is declared and becomes payable it is a debt, and each shareholder is entitled to sue the company for his proportion : Eastern Raihvay Co. v. Symonds (1850) 5 Ex. 237, and the Statute of Limit- ations will bar the shareholders' claims in six years: Re Severn R. Co. (1896 )1 Ch. 564. A dividend must be declared before suit can be brought for it even where shares carry a fixed prefer- ential dividend: Bond v. Barrow Haematite (1902) 1 Ch. 353. As to withdrawal of interim dividend see Layunas Nitrate v. Schroeder (1901) 85 L. T. 22. The mere fact that no dividend is declared by a profit making company is insufficient to warrant an order for an inspection under section 92 of the Act : Re Sarnia Ranchiny Co. (1915) 8 W. W. li. 697. Where there has been a transfer of shares the transferee is entitled to all dividends declared after the date of his transfer or contract for sale: Black v. Homersham (1878) 4 Ex. D. 24. In the absence of express authority dividends must be paid in cash : Hoole v. Great Western Ry. Co. (1867) L. R. 3 Cli. 262; Wood v. Odessa, etc., Co. (1889) 42 Cli. I), nif). Dividends cannot be paid by an issue of debentures: Wood v. Odessa Waterworks Co. (1889) 42 Cli. T). 636, nor by an issue of preference stock: Hoolv V. a real Western h'y. Co. (1S6S) 3 (Mi. 2fi2. But the shareholders may unanimously agree to accept payment in some other form than casli. A stock dividend is stock disti-ihuled lo those already holding stock by way of dividend ni)oii tlieir holdings, per Middletoii,'.!., in Ur Fulfrnd (1!)13) 14 I). I.. U. 420 DOMINION COMPANIES ACT. Sees. 70-71. 844; 21) U. L. 11. 375. See also Re Croiv's Nest Pas:s Hardware Co. (1914) IG D. L. R. 44. Dividends. AVliere the g-overiiing act forbids the capitalization of surplus earnings in this manner the court, after setting aside the directors' resolution declaring the dividend, will not order the payment of the dividend in money: St. Laivrence Furniture Co. v. Binet (1915) 24 Que. K. 6.405; 25 D. L. R. 316. In the absence of provision to the contrary, divi- dends are payable rateably on tlie number of shares held, irrespective of the amount paid up thereon : Oak- bank Oil Co. V. Crum (1883) 8 App. Cas. 65. As to apportionment of dividends see R. S. 0. (1914) c. 156, s. 4 and similar provisions in other provinces. Procedure. Section 80 (b) of the Act empowers the directors to pass by-laws with regard to the declaration and payment of dividends. In the absence of a by-law limiting the power of directors to declare dividends, the shareholders are not entitled to rescind a resolu- tion of the directors declaring a dividend : Denault v. Steivart (1918) 54 Que. S. C. 209. Where the shareholders are the proper persons to declare the dividend, a dividend cannot be legally declared at a meeting of directors : Re Cardiff Coal Co. (1910-11) 3 A. L. R. 325, and it was held in the same case that the court might find from the inspection of the minutes whether the meeting was one of the share- holders or directors. See also Karr v. South Side Lumber Co. (1916) 28 D. L. R. 739, on the necessity for following the regulations applicable for the declar- ation of a dividend. Payment out of capital. To pay dividends when there are no profits is to pay them out of capital, and is tantamount to returning so much capital to the shareholders. It " diminishes " or "impairs" the capital within the meaning of s. 95 of the Ontario Act, or s. 70 of the Dominion Act. DIVIDENDS. 421 Directors, who for fraudulent purposes, and in Sees. 70-71. order to lead shareholders and the public to believe that the affairs of the company are in a favourable position, declare dividends out of profits when there are no profits to pay them, and pay the dividend either . out of the capital of the company or out of money borrowed for the purpose, are guilty of a criminal offence, punishable at common law: Burnes v. Pennell (1849) 2 H. L. C. 497; R. v. Esdaile (1858) 1 F. & F. 213. Accretions to capital. When it is said " that dividends are not to be paid Accretions out of capital, the word capital means the money ^^ ^p^^^^- subscribed pursuant to the memorandum of associa- tion, or what is represented by that money. Accretions to that capital may be realized and turned into money, which may be divided amongst the shareholders:" Verner v. General S Commercial Trust (1894) 2 Ch. 239. A good statement of the principle is that of Byrne, J., in Foster v. Neiv Trinidad Lake Asphalt Co. (1901) 1 Ch. p. 212. He says :— '' It is clear, I think, that an a])preciation in total value of capital assets, if duly realized by sale or get- ting in of some portion of such assets, may in a proper case be treated as available for purposes of dividend. This, I think, is involved in the decision in the case of Lubbock V. British Bank of South America (1892) 2 Ch. 198, cited with approval by Lord Lindley in Verner v. General and Commercial Investment Trust, (1894) 2 Ch. p. 265, where he says: ' Moreover, when it is said, and said truly, tliat dividends are not to be paid out of capital, the word "capital" means the money subscrilK;d pursuant to tlie memorandum of jissocialion, or what is represented by that money. Accrefions to that capital mny be realized and turned into money, which may l)e divided amongst the share- liolders, as was decided in Lubbock v. British Bank of South America.' If I rightly appreciate the true -!_„ DOMINION COMPANIES ACT. S ees. 70-Tl. offoc't oi' the decisions, the (juestit)!! of what is prolit dividends. a\aihible for dividend depends upon the result ol' the whole accounts fairly taken for the year, capital, as well as profit and loss, and although dividends may be paid out of earned proiits in proper cases, although there has been a depreciation of capital, I do not think that a realized accretion to the estimated value of one item of the capital assets can be deemed to be profit divisible amongst the shareholders without reference to the result of the whole accounts fairly taken." English decisions. English de- The wliole qucstioii has been much considered in a whetiier lost number of cases in England, and in Re National Bank hemadJ^^T^f ^Vales, Limited, (1899) 2 Ch. 629, there was a very before divi- f^H discussioii of the principles on which the Courts paid. now act. In that case the losses written off in one year were not brought forward the next year so as to dimin- ish tlie profits of that year, but were simply ignored, a fresh start being made each year, and the dividends being paid out of the excess of the annual receipts over the annual expenses. The effect of this was to throw all bad debts written off and not provided for by an increase of the reserve fund on to the capital; to dimin- ish the paid-up capital year by year, and, nevertheless to keep paying dividends out of the excess of the annual receipts over the current expenses. It is obvious that this method of procedure, if long contin- ued, would ultimately exhaust the paid-up capital of the company, and the first disastrous year in which the current outgoings exceeded the current incomes it would produce great embarrassment. The Court of Appeal said, however: *' Such a mode of dealing with the company's assets, how^ever reprehensible, must nevertheless not be confounded with paying dividends out of the paid-up capital of the company. The paid- up capital of a limited company cannot be lawfully returned to the shareholders under the guise of divi- dends or otherwise. Even an article of association authorizing the payment of interest to shareholders on DmDEXDs. 423 the amounts paid upon their shares cannot authorize a Sees. 70-71. payment of such interest out of capital : see In re Sharp (1892) 1 Ch. 154; but paid-up capital which is lost can no more be applied in paying dividends than in paying- debts. Its loss renders an}' subsequent application of it impossible. There was no such dealing with the paid-up capital of the company in this case as to amount to an illegal application of it. Further, it is not possible for the Court to say that the law prohibits a limited company, even a limited banking company, from paying dividends unless its paid-up capital is intact. Suppose a heavy unexpected loss is sustained, which must be met if there are assets with which to meet it, the capital, even uncalled capital, must, if necessary, be applied to meet it. Such an ap]jlication of capital is a perfectly legitimate use of it. There is no law which, in the case supposed, prevents the pay- ment of all future dividends until all the capital so expended is made good. Many honest and prudent men of business would replace a large loss of capital by degrees, and would reduce. the dividends, but not stop them entirely, until the whole loss was made good. No law com]jels them to pay none at all. There are cases in which no honest competent man of business would think of charging particular debts or expenses to capital. *' We are certainly not prepared to sanction the notion that all debts incurred in carrying on a business can be properly permanently charged to capital, and that the excess of receipts over other outgoings can be afterwards properly divided as profit, as if there had been no previous loss. No honest competent man engaged in trad(; or commerce would carry on business on such a principle. But, excluding cases in which everyone can see that a particular debt or outlay can- not be reasonably charged to capital, it may be safely said that what losses can be properly cliarged to capi- tal, and what to income, is a mattc^r for business men to determine, and it is often ;i matter on which the opinions of honest and compcteni men will differ. See ■il!4 ^ DOMINION COMPANIES ACT. Sees. 70-71. Gregory v. Patchctt (1864) 33 Beav. 595. There is no hard and fast rule on the subject. ^' There can, however, be no doubt that, if tlie expenses or payments are obviously improperly charged to capital, and are so charged simply to swell the apparent profits, and to make it appear that divi- dends may properly be declared, dividends declared and paid under such circumstances cannot be treated as legitimately paid out of profits, and can no more be justified than if they were paid out of capital. This was determined in Bloxliam v. Metropolitan Ry. Co. (1868) L. R. 3 Cli. 337, and has been acted upon in many other cases, e.g., Ranee's Case (1870) L. K. 6 Ch. 104 ; In re Oxford Benefit Building and Investment Society, 35 Ch. D. 502; Leeds Estate, Building and Investment Co. v. Shepherd, 36 Ch. D. 787; In re London and General Bank (No. 2), (1897) 2 Ch. 673. ** It would seeem that Jessel, M.R., inclined to the opinion that a limited company could not pay divi- dends unless its paid-up capital was kept up. See In re Ehh'w Vale Steel, Iron and Coal Co. (1876) 4 Ch. D. 827. But no decision has ever gone this length, and in the light of the preceding cases dividends may be paid, even by a limited company, although its normal capital is not kept up." See also Lee v. Neuchatel Asphalte Co. (1889) 41 Ch. D. 1. The case of Re National Bank of Wales was affirmed, sub nom. Dovey v. Cory (1901) A. C. 477, by the House of Lords, but on other grounds, and some doubt was thrown on the correctness of the proposi- tions laid down by the Court of Appeal. The Court of Appeal has, however, recently followed Re National Ammonia Batik of Wales and the earlier cases in Ammonia Soda ChlmbeV' Co. V. Chamberlain (1918) 87 L. J. Ch. 193; (1918) ^^^°- 1 Ch. 266. There a company at one time had a large amount standing to debit of jjrofit and loss which arose by debiting (at a time when the company's gross trad- ing profit was insufficient to provide the same) certain sums for depreciation of buildings, plant and machin- DmDENDS. 425 ery during a certain period. There was no evidence Sees. 70-71. of any actual depreciation of these items during the period. There were also debited large sums for direc- tors ' fees, mortgage and debenture interest. The effect of this debit was to indicate on the books of the com- pany that the capital was impaired. By a revaluation of the premises, made honestly and in good faith by the directors, the amount at which the company's land stood in the balance sheet was largely increased, with the result that a credit was created which would have enabled the previous debt to be written off. Part of this was written off out of the new credit and jiart out of subsequent net profits. The directors regarded the debit as extinguished and in subsequent years paid dividends which were less in amount than the net profits which were made in those years. In an action by the company against the directors to make them refund these dividends on the ground that tlie profits of subsequent years must in the first instance be applied to replace the previous loss, it was held that this need not be done, that the dividends were not paid out of capital but out of profits and tliat the directors were under no liability to repay the same. See also Lawrawf v. West Somerset Mineral Raihvay (1918) 2 Ch. 250. Distinction between fixed and circulating capital. A distinction has been drawn in the cases between Distinction " fixed " and '' floating " or '' circulating " capital j;*;;:;,*;2i on which the most recent statement is that contained <'i'>ii''«.ii"K in Ammonia Soda Co. v. Chamberlain, supra. There Swinfen Eady, L. J., (87 L. J. Ch. 202; (1918) 1 Ch. 266) said: *' Wliat is fixed capital? That which a company retains in the sliape of assets ujion whicli the sub- scribed capital lias been expended, and which assets either themselves produce income independent of any further action by tlie company, or, being retained by the company, are made use o^ t<> r(»produce income or gain pfofits." . . . "WJKit is ciicnl.iling capital? It is .■i])itii]. •^-^ DOMINION COMPANIES ACT. Sees. 70-71. a portion of the subscribed capital of the company intended to be used by being temporarily parted with and circulated in business, in the form of money, goods ov other assets, and which, or the proceeds of which, are intended to return to the company with an incre- ment, and are intended to be used again and again, and to always return with some accretion." The bearing of the distinction on the question of dividends is stated at the same page as follows : '' The terms ' fixed ' and ' circulating ' are merely terms convenient for describing the purpose to which the capital is for the time being devoted, when consid- ering its position in respect to the profits available for dividend. Thus, when circulating capital is expended in buying goods which are sold at a profit, or in buy- ing raw materials from which goods are manufactured and sold at a profit, the amount so expended must be charged against, or deducted from, receipts before the amount of any profits can be arrived at." And the same distinction is stated in Verner v. General and Commercial Investment Trust (1894) 2 Ch. 239 at p. 266, where Lindley, L.J., said, "Perhaps the shortest way of expressing the distinction which I am endeav- ouring to explain is to say that fixed capital may be sunk and lost, and yet that the excess of current receipts over current payments may be divided, but that floating or circulating capital must be kept up, as otherwise it will enter into and form part of such excess, in which case to divide such excess without deducting the capital which forms part of it will be contrary to law." In Bond v. Barrow Haematite Steel Co. (1902) 1 Ch. 353, Farwell, J., (as he then was) extended the above rule to a realized loss in respect of leasehold iron mines held by the company for the purpose of supplying themselves with ore, which he regarded as circulating capital which must be made up before any dividend could be paid. DWIDENDS. 427 Dividends on shares of companies subject to the Act. Sees. 70-71. Where there is a prohibition against paying any Dividends dividend ' ' which will impair the capital of the com- "? ''^^'^''^^ . . , . of compan- pany such as is contained in s. 70, the foregoing ies subject authorities to the effect that dividends may be declared out of proJEits without restoring lost capital have been said to be inapplicable : Stave rt v. Lovitt (1907-8) 42 N. S. R. 449, 487; Colonial Assurance Co. v. Smith (1913) 12 D. L. R. 113, 122. Sed queer e, for the statute does not impose any obligation on the directors to restore capital lost, nor does it forbid the payment of any dividend ivJiile the capital is impaired. See also 33 Can. L. J. p. 94. Dividends may not be paid except out of profits Profits. — nor excei^t out of divisible profits. What are profits? As regards circulating capital the solution, though not always easy as a matter of evidence, is perfectly clear as a matter of law. See cases above cited. With respect to fixed capital there is no hard and fast rule. Every case must depend on its own facts. An increase in the value of fixed assets will not easily be treated as profit, for it may disappear in the same way as it arose, and, conversely, depreciations in the value of fixed assets need not always be restored before paying dividends out of trading or other profits really earned by the company — but in such circum- stances directors should, to fulfil their legal obliga- tions, act not only honestly but conservatively: Rules. It is submillcd tlial if dii'cctors desire to ])rotect themselves against proceedings for wroiigrnlly declar- ing dividends tliey should <)l)serve the following rules. (1) ('reate a reserve I'iiikI for unexpected losses; set aside pi'oper amounts aiiiiiinlly for (le])reciation of buildings and plant, for icplacing wasting assets, for bad and donbltiil debts. (2) Refi'ain from paying dividends unless the coni- y)any's o])ei-a1i()ns show a p?"o(it accorli acceptiiii^' incorrect statements of the com- pany's officials: Re Owen Sound Lmnher Co. (1017) 33 D. L. R. 487 ; 38 0. L. R. 414. They are not bound to iiivestig'ate the accuracy of the statements put before them: Owen Sound Lumber Co., supra; Dovey v. Cory (1901) A. C. 477 at p. 485. Directors of a bank are not bound to examine its books, but if anything arises to suggest the need of enquiry it is their duty to obtain full explanation and if they retain an official after they are aware of his improper conduct involving the resources of the bank they are liable for his subse- quent SiGts-.Stavert v. Lovitt (1907-08) ^.^2 N S. R. 449 The liability of a director on a misfeasance sum- mons under s. 123 of the Winding-up Act is the same whether he has been regularly appointed or not: Owen Sound Lumber Co. (1917) 33 D. L. R. 487; (1916-7) 38 0. L. R. 414. Where a director is proceeded against under this section he is liable only for the amount whereby the dividends have depleted the capital, ibid. and see the report Be Owen Sound Lumber Co., 33 D. L. R. supra, at pp. 503 and 504, for the difficulty which sometimes exists in ascertaining the amount whereby capital has been reduced. See also Northern Trust v. ButcJiart (1917) 35 D. L. R. 169. Sometimes there is no difficulty in determining the measure of the directors' liability. Thus where a land company sold its lands at a net profit of $25,003.72, but the directors distributed $36,024, the excess of such sum over the net profit was a pavment out of capital: Craivford v. Bathurst Land Co. (1916) 37 0. L. R. 611, 622. It was held in the same case that the directors in ascertaining the profit were entitled to treat a third mortgage received by the com- pany from the purchaser for $50,851.13 as being good, having regard to the fact that the purchaser had actually paid in cash on the purchase $50,000, and to declare a dividend to the extent of the profit so shown. There was no appeal on the question of dividends. See (1918) 42 0. L. R. 256, 260. But the point is fur- ther considered in the reasons for judgment of Duff, and Anglin, JJ., on the further appeal on other DIVIDENDS. 431 branches of the case to the Supreme Court of Canada, Sees 70-71 (1920) 50 D. L. R. 457. Where the president of a company wilfully misre- presented the earnings to the directors so as to induce them to declare dividends not warranted by the actual earnings, he was held to be liable in damages to the company, even though the payment was not out of the fixed capital and was not ultra vires. The fact that the shareholders had received the dividends was immaterial where the company was bringing the action, for if the moneys had not been paid out the working capital of tlie company would have remained larger or its indebtedness have been less: Northern Navigation Co. v. Long (1906) 11 0. L. R. 230. See further the notes to s. 80 and to s. 123 of the Winding-up Act. Position of shareholders. A shareholder who takes a dividend not knowing position of that it is paid out of capital is not bound to return •'^'^aTehoiders. it: Flitcroft's Case (1882) 21 Ch. J). 519; In re DenJiam (1884) 25 Ch. D. 752. But if he does know that it is paid out of capital the company can get it back : Craw- ford V. Bathurst Land £c. Co.*^(1916) 37 0. L. R. 611. Similarly the liquidator can recover dividends im- properly declared, at any date where the shareholder can not plead good faith: Hyde v. Scott (1919) 47 D. L. R. 260, 267. Where a dividend has been declared when the company is insolvent the a])plication thereof in pay- ment of shares in full will not be allowed and on a winding-up the siiareholders are not entitled to any credit in respect thereof: Re Northern Constructions Ltd. (1910) 19 Man. L. R. 528. Preference shares. The dividind dii preference shares depends on the Prefpreuce terms of the issue, and such terms may be found in the ^''•'»'""^- letters patent or in the by-laws. See Ashhury v. Wat- son (1885) 30 rii. 1). 376: ]Vr}>t> v. Earle (1865) ].. R. 20 Eq. 556. 432 i)():\iixi()\ COMPANIES act. Sees. 70-71. One advantage of deiining the riglits of preference ;nul other shareholders in the petition and of having them inserted in the letters patent is to fortify the position of the respective classes, for right.'^ uncon- ditionally attached by the letters patent to a particu- lar class of shares cannot be altered or infringed: Ashhury v. Watson, supra. See note on Preference Shares, supra. Every infringement or attempted infringement of the rights of a preference shareholder will be restrained by injunction and the fact that the owner of preference shares may have for years asquiesced in the declaration of a dividend on the ordinary shares while there was an arrear of dividend due on the preference shares, will not deprive him of his right in respect of subsequent arrears tliough it will pre- clude him from making any claim in respect of tl)ese particular arrears : Matthews v. Great Northern Rail- tvay Co. (1859) 28 L. J. Ch. 375, and see also heeling V. Insurance Co., 45 Barb. 510. Bonus. '' Bonus may be described as whatsoever comes from a fund accumulated during several preceding years for any purpose, and ultimately found unneces- sary for the ordinary payments, or grown so large as not to be capable of being dealt with in the usual way; if that be paid to the shareholders in addition to the dividend, I should say that was a bonus." Krn- dersley, V. C, in IIollls v. Allan (18(56) 14 W. R. 980. Tenant for life. As between the tenant for life and the remainder- man of shares which have been settled by deed or will, the principle is that the tenant for life takes all divi- dends and bonuses declared in his lifetime : Price v. Anderson (1847) 15 Simons 473; Hopkins' Trust (1874) L. R. 18 Eq. 696; Armitar/e v. Garnett (1893) 3 Ch. 337 ; Malam v. Hitchens (1894) 3 Ch. 578. But where the dividend is paid in shares it may be regarded as being, capitalized, and in this case the DI\T[DEiSfDS. 433 tenant for life cannot claim it as income: Bouch v. Sees. 70-71. Sproide (1887) 12 App. Cas. 385; Barton's Trust' (1888) L. R. 5 Eq. 238. The exercise of the company's discretion in distri- buting profits as dividends or converting them into capital is binding on both the remainder-man and the tenant for life : Bouch v. Sproule, supra. What a company says is income shall be income, and what it says is capital shall be capital : Re Bouch (1885) 29 Ch. D. 659; and the question whether profits remain income or have been capitalized is in each case a question of fact. ibid. See also In re Piercy (1907) 1 Oh. 289. But the mere fact of moneys being taken from undi- vided profits and carried to a reserve fund has been considered not equivalent to their capitalization: Re Bridgeivater Navigation Co. (1891) 2 Ch. 317; but see FisJter v. Black and White Publishing Co. (1901) 1 Ch. 174. The time when the profits were earned by the com- pany is immaterial as between tlie tenant for life and remainder-man. Their rights have been made dependent on the legitimate acts of the company, and Kul)ject to the law of aj^portionment, are determined by tlje time not at which the profits are earned by the company but by the time at which they are by the action of the company made divisible amongst its members: Re Bouch (1885) 29 Ch. D. 659; see also Dair V. If ages (1871) 40 L. J. Ch. 244; Maclaren v. Stamton (1861) 3 D. F. & J. 202; hi re Oqilvie (1919) 88 L. J. Ch. 159; In re Thomas (1916) 2 Ch. 331. Jlowever, in certain cases anotlier principle may be applied, viz., tliat when executors delay realizing com- ])any shares so as to nurse a doubtful asset, and tliis operates to deprive tiie life tenant oi' iiis income in the iMcantinie, tlie wliole loss can not be thrown either upon capital (»i- income, but must be distributed between capital .iikI income : Re Leys (1911-12) 3 0. W. N. 464, per Middleton, J. and see In re Atkinson n.c.A.— 28 434 DOMINION COMPANIES ACT. Sees. 70-71. (U)04) 2 Oh. 160: llibbert v. Cooke 1 Sm. & Stu. 552; In re Bird (1901) 1 Ch. 916. TliG ell'ect of the Apportionment Act in respect of dividends dechired after the death of a tenant for life, but dechired for a period entirely prior to the death of the tenant for life, is to make such dividends fall into the estate of the tenant for life: In re Muir- head (1916) 2 Ch. 181; 85 L. J. Ch. 598. Reserve fund. '* Such a fund is a very common feature in well managed and prosperous companies of all kinds, and it consists of moneys made or saved as a result of their operations from year to year and not paid out in dividends to their shareholders. Instead of being left as a floating balance at the credit of profit and loss account, it is transferred to another account and called the rest account or reserve account or surplus; but, under whatever name it may exist, it is simply the company's current surplus of assets over liabilities, treating the paid up capital as a liability, ' ' per Street, J., in Toronto v. Consumers' Gas Co. (1903) 5 0. L. R. 494 at p. 499-500. A reserve fund may consist of goods as well as money: Gignac v. Gignac & Cie. (1910) Que. 37 S. C. 174, per Lemieux, J., at p. 184. The directors of a company, in the absence of pro- visions to the contrary in the letters patent or by-laws, and subject to the control of the shareholders, are entitled to maintain a rest or reserve fund and are not bound to distribute the whole of the profits among the shareholders. The reserve fund may lawfully be in- vested in such securities as the directors may select, subject to the control of a general meeting of the shareholders, and it is not ultra vires for a company to invest its profits in the name of a sole trustee, who will be strictly accountable for all investments held by him. If the directors prefer to do so, subject to the control of the shareholders, they may retain the profits " as an undivided fund standing at the credit of profit and loss, or appropriate them to any other use of the DIVIDENDS. 435 company: Butiand v. Earle (1902) A. C. 83; City o/ Sees. 70-71. Toronto v. Consumers' Gas Co. (1903) 5 0. L. R. 494; Kennedy v. Acadia Pulp, Sc, Co. (1905) 38 N. S. E. 291. The Court lias no jurisdiction to control the deci- sion of the shareholders as to the propriety of retain- ing profits undivided; nor will the Court interfere to say what is a fair or reasonable sum to retain undivided or what reserve fund may properly be required : Bur- land V. Earle (1902) A. C. 83, at p. 95. And in that case it was held that a minority of the shareholders could not prevent the directors who held control from retaining a very large sum as a reserve fund. No doubt, if it could be shown that the directors were not acting bona fide either in maintaining an in- ordinate reserve fund or in their investment of it, a shareholder could claim the intervention of the Court. See the observations of Lord Davey in the same case at p. 97 of the report. In Bond v. Barrow Haematite Co. (1902) 1 Ch. 353, Farewell, J., at p. 368, observes that it would be a very strong measure for the Court to override the discretion of the directors and compel them to pay a dividend which they thought the state of accounts did not justify. Preference shareholders have no right to object to the setting aside of a reserve fund even when their shares carry a fixed cumulative dividend : 5o«^ v. Barrow Haematite Co. (1902) 1 Ch. 353, 362. If the preference dividend ])e non-cumulative the relative rights of the common and preference shareholders may be seriously affected liy the exercise of the directors' discretion in 1ln' matter of the amount of the reserve fund. For the liind set apart mav leave the balance of divisible profits insufficient to pay. the full preference dividend, tliereby increasing the surplus availal)l(' for dividends on oi-dinary slinres in future years. Wiiere tliei'e is more than one chiss of shareholders *' it will be the duty of the directors to fix the amount of the fund retained with reference to the general in- terest of all classes of shareholders, and not to favor 43() DOMINION COMPANIES A."r. Sees. 70-71. any ouv class at the expense of the others," per Lord Cranworth, L.C., in IJoiri/ v. (heat Nortliern By. Co. (1857) 1 l)e G. & J. GOG, at p. G38. See also as to the dnty of directors in determining the amount of surplus profits available for the distri- bution of dividends the observations of Britton, J., in Leslie v. Canadian Birkbeck Co. (1913) 10 D. L. R. 629. Directors. liiiardof 72. Tlie affairs of the company sliall ho managed by a directors. board of not less than three directors." (1918, 8-9 Geo. V., c. 13, s. 2). Such a provision as the above is imperative and not merely directory. A board of less than three can not carry on the business of the company ; so a call, made or a forfeiture declared by less than the specified num- ber of directors is invalid: Alma Spinning Co., Bot- tomley's Case (1880) 16 Ch. D. 681. The point is also discussed in Be Bank of Syria (1901) 1 Ch. 115, where the articles provided that the continuing directors might act notwithstanding any vacancy. The section does not affect the right of the company under s. 76 to increase the number of directors nor the right of the directors under s. 80 (e) to pass by-laws for fixing a quorum. So where the by-laws provide for a board of seven with a quorum of four, and four directors cease to be qualified, tlic remaining three have no power to fill vacancies under s. 78 (c) : Sovereen v. Whiteside (1906) 12 0. L. R. 638. Where there is no quorum under the by-laws no business can be carried on by the remaining directors : Sovereen v. Whiteside, supra; Manes Tailoring Co. v. Willson (1907) 14 0. L. R. 89, 96, where the number of the board was reduced without carrying out the necessary proceedings in that regard. See also Toronto Breiving and Malting Company v. Blake (1882) 2 0. R. 175"; Tivin City Oil v. Christie (1909) 18 0. L. R. 324. But the presence on the board of directors of some who are not qualified at the time of their election is not sufficient to invalidate the acts of the board if done by a legal quorum of properly PROVISIOXAL DIRECTORS. 437 elected directors: Morden v. Heckels (1908) 17 Man. Sect. 72. L. R. 557. Where the board has been reduced below the statu- tory minimum or there is no quorum under the by-laws a meeting may be convened under s. 87 of the Act for the purpose of filling the vacancies. See Sovereen v. Whiteside (1906) 12 0. L. E. 638. 73. The persons named as such, in the letters patent, shall Provisional be the directors of the company, until replaced by others duly . KH. Gwynne,"j., at p. 119 there expressed as his opinion that llic ])()wers of i)ro- visional directors were confined 1o pulling the act of incorporation into opei-;ition iinlij tlic amount neces- sary to enable the company to elect regulai" directors -1-38 DOMINION COMPANIES ACT. Sect. 73. was subscribi'd, \vliorcui)oii the duties oi' the provi- sional directors ceased. Tins case was affirmed on appeal, but the question of the powers of provisional directors was not an issue on the appeal. See also In re London, Sc, Ry. Co. d Township of E. Wawanosh (1875) 36 U. C. Q. B. 93. liagarty, C.J.C.P., in MicJile v. Erie S Huron Ry. Co. (1876)* 26 U. C. C. P. 566, goes into the subject more fully. ''From this we gather that the meaning of Powers of the term 'provisional directors' is that they are to dTrectors.^ perform certain limited and temporary functions existing merely until the complete macliinery provided by law may be provided ; that it was not the intention of the legislature to give them as much power as was given to directors elected by the shareholders; that their duties were limited to purposes of organization, to opening stock books and dealing with subscriptions and upon the necessary amount being subscribed and paid up to call a general meeting of the shareholders, whereupon their duties would cease, and that the 'working up' of bonuses and incurring large expense in doing so was not within their powers as conferred by the special Act there under consideration. They must not derive any personal advantage from their office and are to create no unnecessary burden for those who subscribe for shares." In this' judgment Gwynne and Gait, JJ., concurred. See Re North Simcoe S Toronto (1875) 36 U. C. Q. B. 101; Peter- borough v. Grand Trunk (1859) 18 U. C. Q. B. 220; Maclaren v. Fisken (1881) 28 Gr. 354; Wilson v. Ginty (1878) 3 A. R. 124; Denison v. Leslie (1879) 3 A. R. 536, and Norivich v. Attorney-General (1865) 2 E. & A. 541, which followed Michie v. Erie S Huron, supra. No provisional director can bind the company by his representations or agreements. A provisional director cannot bind the company by agreeing that a subscriber for stock sliall have to pay his subscription only if the company fulfils certain conditions : Wilson V. Ginty (1873) 3 A. R. 124. In O'Dell V. Boston S Nova Scotia Coal Co. (1896) 29 N. S. R. 385, it was decided that provisional direc- PROVISIONAL DIRECTOES. 439 tors might discharge employees, that forming part of Sect. 73. the usual duties of management; and in Adair v. Brit- ish Croivn, £c., Co. (1915) 24 D. L. R. 905, that provi- sional directors ma}' secure stock subscriptions through agents. Where an Act creating a company required that it should not coromence operations until fifty per cent, of its capital had been paid up it was held that this did not prevent the provisional directors from proceeding to allot stock and collect calls or do any other act within their power short of actual operation of the company : North Sijdney, dc, Coal Co. v. Greener (1898) 31 X. S. R. 41. Where a person was employed by one of the provi- sional directors of a company to do certain work on . behalf of the company in advertising and promoting its undertaking, and it was shown that such provisional director was entrusted by the company with the duty of promoting and furthering the undertaking and that he did so from time to time without any specific in- structions from his co-directors at formal meetings of the board, but tliat they were fully cognizant of what he did and allowed him to transact the business of the company without interference from them, it was held that the person employed was entitled to recover from the company for the value of his work: Allen v. On- tario & Raimj River Ry. Co. (1898) 29 0. R. 510; Wood v. Ontario (1874) 24 U. C. C. P. 334, disapproved and Mahoney v. East Holyford (1875) L. R. 7 H. L. 869, followed. Wlicre a company was incorporated by special Act and among the powers conferred on the provisional directors was the following, *' and may do generally what is necessary to organize the company," it was held that the provisional directors had no right to pur- chase a subscriber's mortgage and apply part of the purchase price to calls on shares. It was also laid down that in the absence of special provision provi- sional directors have no power to delegate their powers to committees: Monarch Life Assurance Co. v. Brophy 440 DOMINION COMPANIES ACT. I'owors of Itrovisioual ■ lirectors. Sect. 73. (liXX)) 14 0. L. K. 1, or make a contract for hire of services of a medical examiner for the whole duration of the company's existence: Lehel v. Security Life In- surance Co. (1915) 47 Que. S. C. 238. See also for the powers of provisional directors under the Bank Act as it stood at the date of the deci- sions: Re Monarch Bank (1910) 22 0. L. R. 516; Re Monarch Bank of Canada (1914) 32 0. L. R. 207. The provisional directors of a company acquire no rights or interests in the charter capable of sale ; com- pany charters are extra commercium and where a com- pany is incorporated by special Act there is the further rule that it is a matter of public policy that Acts of tlie legislature should not be the subjects of purchase and sale: Vipond v. Robert (1908) Que. 17 K. B. 403. But it has been held under the special authority there conferred that provisional directors of a railway could sell the whole undertakiug: Minister of Railivays and Canals v. Quebec Southern (1908-9) 12 Can. Ex. Ct. Rep. 153. The powers of provisional directors must be de- termined solely on the language of the governing statute: Selkirk v. Windsor (1901) 21 0. L. R. 109, affirmed 22 0. L. R. 250; Monarch Life v. Brophy (1906) 14 0. L. R. 1. From the decisions referred to above the following conclusions regarding the powers of provisional direc- tors may be drawn. Conclusions. 1- The solc tcst for the powers of provisional direc- tors is to be found in the words of the statute under which the company is incorporated. Their powers are co-extensive with the language employed, but in no case can exceed the powers so conferred. 2. If, as is sometimes the case, for example with banks, the company is incorporated under a special Act, passed in pursuance of a general Act, the special Act must be read in the light of the general governing Act. The special Act may supplement the powers given under the general Act, but only in so far as such powers PKOVISIOXAL DIRECTORS. 441 do not contravene the principles stated in the general Sect. 73. Act. 3. It would also seem to be possible for letters patent to specify certain powers so long as such powers do not exceed what was the plain intent of the general Act to confer. (2) Under the Act. The first directors appointed by the letters patent, although called provisional directors, are, until re- placed, directors of the company with all the powers and duties of permanent directors, except that they can not without incurring personal liability commence operations before ten per cent, of the authorized capi- tal of the company has been subscribed and paid for, s.s. 26 and 86. There is nothing in the Act to indicate that the authority of the provisional directors is only tempor- ary or limited: Muldoivan v. German Canadian Land Co. (1909) 19Man. R. 667. It is immaterial that no proceedings have been taken to organize the company: Campbell v. Taxicabs (1913) 27 0. L. R. 141, no by-laws passed, nor directors elected, or that the company has commenced operations in violation of s. 26; and the company will be bound by a contract for sale of land signed on its behalf by one of the persons named in the letters patent as the pro- visional directors representing himself, with the ac- quiescence and knowledge of the directors, to be the general manager: Muldoivan v. German Canadian Land Co. (1909) 19 Man. R. 667. in Johnston v. Wade (1909) 17 0. L. R. 372, Mac- Mahon,J.,tlie trial, judge, who was affirmed by the Court of Apjx'al, thought provisional directors under a coi-- res]j()ii(liiig section of llic Ontario Act liad llic full powers of permanent directors, in the Court of Ap- peal Oslci', J. A., upheld the judgment substantially for the reasons given in the Court below. Meredith, ^.A., at p. 389, said : " Wliat I'iglit has tliis or any otlier Court to interpose a limit wliicli tlic Legislature has not seen fit to impose; and, if i1 1i;mI, where would the W2 DOMINION COMPANIES ACT. Sect. 73. lino be drawn ; would it rest upon the notions of Judge, or Court, in wliicli there might be an entire lack of experience and practical knowledge on the subject!" And the learned judge expressed the opinion that pro- visional directors had power to pass a borrowing by- law^; MacLaren, J. A., concurred in the judgment of Meredith, J.A. Moss, C.J.O., at p. 381, was'not pre- pared to assent to the view of MacMahon, J., and (Jar- row, J.A., dissenting, expressed the view that provi- sional directors had no such power. It may also be noted that in Re Wakefield Mica Co. (1906) 7 0. W. E. 104, Moss, C. J. 0., delivering the judgment of the Court, while holding that it was not necessary for the purpose of the decision to discuss fully the extent of the authority of provisional directors, leaned to the view that as provisional direc- tors were required by s. 1 G of the Ontario Companies Act, R. S. 0. 1897, c.'l91, to call a meeting within two months from the date of the letters patent for the lourpose of organizing the company for the commence- ment of business, they had no power to deal with the issue and transfer of stock. These important matters he said were usually dealt mth by the by-laws duly passed by a properly elected board of directors and confirmed by the shareholders. The Dominion Act contains no provision corresponding to s. 16 of the On- tario Act. See also Perrins, Ltd. v. Algoma Tube Works (1904) 8 0. L. R. 634. Termination The functions of the provisional directors come to of functions, ^j-^ q^^ upon the election of the permanent directors: MacDonald v. McBeth, 11 U. C. C. P. 224, 228, and they can then no longer bind the company: North Sydney V. Greener (1898) 31 N. S. R. 41. Apparently the pro- visional directors are not entitled to lay down their oflSce before the election of permanent directors. Where a special Act made certain persons first direc- tors "to continue in office until the first ordinary meet- ing held after the passing of the Act " it was held that the Act imposed upon such persons the statutory obli- gation of continuing directors until the first ordinary PKO^^SIONAL DIRECTOES. 443 meeting: In re South London Fish Market Co. (1888) Sect. 73. 39 Ch. D. 324. ~ Provisional directors must proceed reg-ularly in the Procedure, manner prescribed by the Act, and if they meet mthout proper notice having been given or attempt to transact business without a quorum their acts will be invalid: McLaren v. Fisken (1881) 28 Gr. 352. The board of provisional directors must be replaced by an equal number of permanent directors. See Re Carpenter, Ltd., Hamilton's Case (1915-6) 35 0. L. R. 62G. If it is desired to make the number of the per- manent directors different from that of the provisional board the procedure laid down in s. 76 must be fol- lowed. A by-law must be passed and ratified by the shareholders and a copy of the by-law deposited in the Department and published in the Canada Gazette. See Manes Tailoring Co. v. Willson (1907) 14.0. L. R. 89, 96; also Re Carpenters, Limited, Hamilton's Case (1915-16) 35 0. L. R. 626, (1916) 29 D. L. R. 683, a case decided under R. S. 0. 1914, c. 178, s. 83, which ex- plicitly provides that the number of permanent direc- tors to be elected to replace the provisional board must be the same. In Vipondx. Robert (1908) Que. 17 K. B. 403, Dejith of^^^ Bosse, J., thought that as almost all the provisional SfreeSrs.^ directors had died the company was virtually extinct and tliat for this reason the Quebec Legislature by 7 Ed. VII. c. 47, R. S. Q. 1909, Arts. 5964, 6062 enacted a provision whereby the heirs or assigns of deceased provisional directors may call a meeting of sharehold- ers for the election of directors. It is submitted, how- ever, that as the provisional directors are shareholders, and section 3 (d) of the Act defines shareholders so as to include the personal representatives of sharehold- ers, such personal representatives under the authority of sections 74 and 87 of the Act could meet and elect a permanent board. 74. If. at any timf, an olcriion of rlirodors is not inaclo, or Fjiilnreto does not take effect at the proper time, the company sliall ""^ j^J,'j.^t di^rcc- be held to be thereby dissolved; but such election may take ,.cmodied. place at any snbser|uent special general meeting of the company 444 Sect. 74. Special general meeting. Qualifica- tions of directors ^ected. duly call(Ml Tor t continue in olli('(- c. 15, s. ()■'. DOMINION COMPANIES ACT. tliiii jHirposc; ;iu(l llio retiring diroetors shall until ilieir successors are elected. 2 E. VTT., Apart from statute or by-law it would seem to be iiii])liecl that the directors of the company should hold oflQce until their successors be duly elected and qualified. This is an application of the rule in respect of ordinary trustees. Nor would the failure to elect directors work a dissolution of the company ipso facto at common law : People v. RioiJde (1812) 9 Johns (N.Y.) 147; Hicks v. Borough of Lanceston, 1 Rolle Abr. 514. See also In re Consolidation Nickel Mines (1914) 1 Ch. 883. General meetings are held periodically at appointed times for the transaction of general business, e.g., annual meetings; special meetings are held for the transaction of particular business, e.g., for ratifying a borrowing by-law. The term "special general meet- ing" accordingly would seem to be a misnomer, for such a meeting would not be held periodically at ap- pointed times; see Austin Mining Co. v. Gemmell (1886) 10 0. R. 696, at p. 703. See also Christopher v. Noxon (1883) 4 0. R. 672. Where no election of directors has taken place at the proper time, i.e.; the annual meeting, the meeting provided for in the above section may be called by requisition of one-fourth in value of the subscribed stock under s. 87: Austin v. Gemmell (1886) 10 0. R. 696; see also Sovereen Mitt, Sc, Co. v. Whiteside (1906) 12 0. L. R. 638. Where directors are not elected at the end of their term and a vacancy occurs they can not fill it under s. 78 (c) for the intervening period until an election is held. Any election in such case must be by shareholders, per Moss, C.J.A., in Kiely v. Kidy (1878-9) 3 A. R. 438, at p. 443. 75. No person shall be elected as a director or appointed as a director to till any vacancy unless he is a shareholder, owning stock absolutely in his own right, and to the amount required by the by-laws of the company, and not in arrear in respect of any cah 'thereon. 2 E. Vll., c. 15, s. 63. DIRECTORS. 445 (2) A person named as a director or proposed director Sect. 75. in any prospectus, or in any notice in lieu of prospectus, issued by or on behalf of the company, shall not be capable ot beins^ I^estnctions appomted director ot the company unless, at the time of the ment or publication of the prospectus, he has bv himself or by his agent aflvertise- authorized in writing,- ^ ZTctt. (i) Signed and filed with the Secretary of State of Canada a consent in writing to act as such director; and, (ii) Either signed the petition for incorporation and mem- orandum of agreement and stock book for a nuinl)er of sliares not less than his qualification (if any) or signed and filed with the Secretary of State of Canada a contract in writing to take from the company and pay for his qualification shares (if any). 7-8 Geo. V., 1917, c. 25, s. 10. The effect of the section is to make the possession of the qualification a condition precedent to election, and if the person elected does not possess the qualifica- tion he does not become a director de jure: Jenner's Case (1876) 17 Ch. D. 132. A director must hold at least one share : Re Ilaggart S Co. (1892) 19 A. R. 582, 587. If the by-laws of the company make the hokling of a greater number of shares necessary their provisions must be complied with. By-laws respecting the share qualification of directors may be made by the directors under the autliority of section 80 (c) of the Act, and such by-laws remain in force onh until the next annual meetin"- of the company unless they are in the meantime confirmed at a general meeting. It has been held by the Court of Appeal in Manitoba tliat a board of directors, some of whom are only direc- tors de facto by reason of want of qualification, may carry on the affairs of the company so long as tliere is a legally elected (luoiuni and that quorum acts; Moid en V. Heckels (1908) 17 Man. T.. R. 557. Subsequent registration as a shareliolder will not re-establisl) in liis office a director previously dis(|u;ili- fied: Suttou v. Hiif/lish c^ Colonial (1902) 2 Ch. 502; and see Chatim I ('ollicrirs Tnisf v. -S7. Marr/areCs, £c., Light Bii. (1915) 84 I,. J. Ch. 28, 33. 44() DOMINION COMPANIES ACT. Sect. 75. The lueaiiiiig ol' liic words "in his own riglit" has In his owu ^^*^^' '^^ might 1)0 oxpectcd, been hckl to iHi})ly a bciie- rijrht. ficial hokUiig, but it has been considered sufficient that a director liolds shares as trustee : Pidbrook v. Rich- mond Mining Co. (1878) 9 Ch. i). GIO. It was there said that a man holds in his own right if he is registered without any qualification. This decision has been ques- tioned, however, in the English Court of Appeal : Bain- bridge V. Smith (1889) 41 Ch. D. 470. See also Cooper V. Griffin (1892) 1 Q. B. 740, and Hoivard v. Sadler (1893) 1 Q. B. 1. In. order to hold shares in his own right the director must so hold that the company can safely deal with him as owner in respect of the shares : Buckley, L. J., in Sutton v. English (& Colonial (1902) 2 Ch. 502, at p. 505. Accordingly, in that case it was held that where a trustee in bankruptcy notified the com- pany that he claimed certain shares, the company could not have safely dealt with the shareholders in disre- gard of the claims of the trustee, and that, therefore, the shareholder had become disqualified from being elected a director. Holding shares as liquidator of another company is not holding in the director's own right: Boschoek v. Fttke (1906) 1 Ch. 148. Nor is holding shares as col- lateral security sufficient: Macdonald v. Drake (1906) 16 Man. L. R. 220. Absolutely. The wording of section 75 differs from the terms of the articles under which the above English cases were decided by the addition of the word *' absolutely," and there appears to be little doubt that in the case of com- panies subject to the Act a director must be the bene- ficial owner of his qualifying shares : Ritchie v.- Vermil- lion (1902) 4 0. L. R. 588, per Maclennan, J. A., at p. 597. In Lucas v. North Vancouver (1913) 12 D. L. R. 802, 18 B. C. R. 239, Macdonald, C.J.A., and Galliher, J. A., held that under the Railway Act, R. S. C. 1906, c. 37, s. 112, which states that "no person shall be a director unless he is a shareholder owning twenty shares of stock, etc.," holding shares as trustee with- out any beneficial interest in them was not enough. The DIRECTORS. 447 remaining judge, Irving, J.A., while dissenting as to Sect. 75. the effect of the words of the section of the Railway ' Act, at p. 805, stated that under the Dominion Com- panies Act a director can not qualify on shares held in trust. It is not necessary for the qualification of a direc- tor that he should have been actually registered as a shareholder; if his subscription for the requisite num- ber of shares has been accepted that is enough : Alley V. Trenholme (1893) Que. 3 S. C. 163. See Morden v. Heckels (1908) 17 Man. L. R. 557. arrearin respeet of The restrictions in subsection (2) would not seem ^^^^^' to be applicable to the prospectus of an intended com- pany. Payment in cash of qualification shares is not re- Mode of quired: Paul v. Kohold (1905) 2 "W. L. R. 90, per Har- payment. vey, J., citing St. Stephen Branch Ry. Co. v. Black (1870-1) 13 N. B. R. 139; and even if it were required a by-law providing that the acts of unqualified direc- tors should be valid would cure the irregularity, ihid. Where the statute or articles of association merely Shares held state that the director's qualification is the holding of ^°'"'^^^- a certain number of shares he may qualify although he holds them jointly with another person : In re Glory Paper Mills Co., Dunster's Case (1894) 3 Ch. 473. The eligibility of directors should not be enquired Eligibility, into a collateral wav: Modstock Co. v. //arm qui re?S -, Austin \ . Gemmell (1885-6) 10 O. R. 696. A single shareholder has a right of action for a declaration that directors are disqualified: Theatre Aniusemenf Co. v. Stone (1914) 50 S. C. R. 32. A director may be estopped from denying the qunlifientioTi of nnother: Kiely v. Smyth, 27 Gr. 222. A (|nalified director may bring an action in his own name against the other directors for an iniiiTiction to restrain them from wrongfully excluding him: Pid- hrook V. Rirhwovd (1878) 9 Ch. D. 610. -t^^ DOMINION COMPANIES ACT. Sect. 75. It lias been licUl tliat a company registered under the Companies Act, 1S62 (Imperial) may have a limited company as a director: lie Ihiltiivayo Market Co. (11)07) 2 Oh. 458. It is at least doubtl'id whether this would be permissible under the Act, which appears to contemphite individuals only as directors; cf. s. 79. Ceasins to The Act contains no provision that on loss of share ficatmrand qi^alificatiou the office of a director is vacated such as oS*^ is found in the Ontario Act, R. S. 0. 1914, c. 178, s. 87. The common form of by-law relating to the vacation of office by directors in certain events provides that a director shall ipso facto vacate his office on ceasing to hold his share qualiiication. In the absence of such a by-law a director would not ipso facto cease to hold office: Pulbrook v. Richmond (1878) 9 Ch. D. 610. Disquaiifi- The usual form of by-law provides that the office of directors. ti director shall ipso facto be vacated : — (a) If he accepts or holds any other office under the company except that of managing-director, or (b) If he becomes bankrupt, or suspends payment, or compounds with his creditors, or (c) If he is found lunatic or becomes of unsound mind, or (d) If he ceases to hold the required amount of shares to qualify him for office, or (e) If he absents himself from the meetings of the directors during a period of three calendar months without special leave of absence from the directors, or (f ) If he is concerned or interested in or partici- pates in the profits of any contract with or work done for the company; but no director shall vacate his office by reason of his being a member or shareholder of any company, which has entered into contracts wntli or done any work for the company, or which is concerned in or participates in the profits of any contract with the company. Nevertheless he shall not vote in respect of any contract in which he is so interested, or (g) If by notice in writing to the company he re- signs his office. DIEECTOES. 449 Prima facie a director who accepts any other office Sect. 75. ill the company vacates his directorship: Mihvard v. jj^j^^ Thatcher (1787) 2 T.R. 81; Iron Ships, d:c., Co. v. Blunt other (1868) L. R. 3 C. P. 484. The appointment is good but ''®''^" the director loses his office : Eales v. Cumberland (1861) 6 H. & N. 481. A trustee of a covering trust deed nominated and paid by the company is mthin the prohibition: Astley v. Tivoli (1899) 1 Ch. 151. And where a director is appointed managing director at a remuneration he will not only automatically vacate his office but will also be disentitled to recover his salary f I'om the company if the necessary procedure for valid- ating his remuneration has not been followed: Claudet V. Golden Giant Mines (1909-10) 15 B. C. R. 13. Where a director becomes financially insolvent and Becomes writes to creditors asking them to accept a composi- ^^ ^"^ ' tion, and holds out as an inducement to each to do so that other creditors are willing to accept the proposi- tion, lie is insolvent within the meaning of the above bj^-law. See also London & Counties, dtc, Co. v. Brigh- ton (1915) 84 L. J. K. B. 991; 2 K. B. 493. Vide supra. Ceases to hold qnali- Voluntary and deliberate absence only is covered l)y the provision which does not a])ply to absence due to himS/from illness : Mack's Claim (1900) W. N. 114. Time does not ■"^etings begin to run until he has failed to attend a meeting at which he ought to have been present: In re London S Northern Bank, McConmdVs Claim (1901) 1 Ch. 728. Directors who are mcmliers of a partnership firm ;\[,j,kinpiin- wliicii sup[)li('s goods to the company at a profit thereby ai'thonzed become disqualified. Wliere such contracts were in violation of the provisions of the Alberta Companies Ordinance art. 57, Table ''A," it was held tlml tlioy could not be ratified by a majority of the shareholders however great: Theatre Amusement Co. v. Stone (1915) 50 S. C. R. 32; a unanimous vote of the sliare- holders alone would suffice, per Anglin, J., at p. 37. D.C.A.-L'f) 450 Sect. 75. Resignation Number of directors. Head office. Sanction of shareholders, Deposit of by-law. Chief place of business. Changing number of directors. Requisites. DUMIMON COMPANIES ACT. A man wlio is a shareholder in another comi)any which contracts with the company is "interested in the contract": Todd v. Boh'inson\\SS4:) U Q. B. 1). I'd'd'.Diwcs V. Grand Jiuicfiou Canal Co. (1852) 3 H. L. C. 794; Whitehj v. Barley (1888) 21 Q. B. I). 154. Where a director becomes disqualified by some act such as being secretly interested in a contract, the board have no power to condone it, but it has been held that the disqualification continues only so long as the contract continues, and the director's subsequent re- election may be valid : Bodega Co. (1904) 1 Ch. 276. A valid resignation cannot be withdrawn : Begina v. Mayor of Wigan (1885) 14 Q. B. D. 908. If it is desired to suspend the operation of the resignation until ac- ceptance by the board the words "and such resignation is accepted" should be added to paragraph (g) above: Glossop V. Glossop (1907), 2 Ch. 370. 76. The company may, by by-law, increase or decrease to not less than three the number of its directors, or may change the company's chief place of business in Canada : Provided that no bv-law for either of the said purposes shall be valid or acted upon unless it is approved l)y a vote of at least two-thirds in value of the stock repi-esented Iw the shareholders present at a special general meeting duly called for considering the by-law ; nor until a copy of such by-law, certified under the seal of the company, has been deposited in the Department of the Secretary of State of Canada and published in the Canada Gazette." (1918, 8-9 Geo. V., c. 13, s. 3). See the note to s. 30. Section 72 fixing the minimum number of the board does not affect the right of the company to pass by-laws to increase the number of directors : Sovereen v. White- side (1906) 12 O. L. R. 638, 640. The following formalities are required by the sec- tion : — 1. The change must be made by by-law. A resolution is insufficient: Johnston v. Wade (1909) 17 O. L. R. 372, per MacMahon, J., at pp. 375-6, and see Sherker v. Budner (1911) 39 Que. S. C. 44, 47. For the distinction between a resolution and a by-law CHANGIN'G NUMBER OF DIRECTOES. 451 see Manes Tailoring Co. S Willson (1907) 14 O. L. R. Sect. 76. 89. 2. The by-law must be approved by at least two- thirds in value of the stock represented at a special general meeting of the shareholders duly called for considering the by-law. "Two-thirds in value" is to be computed on the face value of the number of shares held and not upon the amount paid up : Purdom v. Ontario Loan d Deben- ture Co. (1893) 22 0. R. 597. The meeting must be "special," i.e., notice of the special business to be transacted must be given to the shareholders. Thus it is not a compliance with the section for the by-law to be passed at a general annual meeting without special notice : Sherker v. Iludner (1911) 39 Que. S. C. 44; Christopher v. Noxon (1884) 4 0. R. 672. The meeting must be duly called. As to the requirements in this regard see the notes to s. 88. See also Manes Tailoring Co. v. Willson (1907) 14 (). L. R. 89, 96, and Clary v. Golden Rose (1912-13) 4 0. W. N. 1491. Qucere, if all llic shareholders unanimously consent to the change, notwithstanding the non-compliance with the above requirements, whether this requirement may be dispensed with. In Sherker v. Rudner (1911 ) 39 Qu(>. S. C. 44, it was said no acquiescence could cure non-coinj)liaiK*(' with the section, and see Re Carpenter, Ltd., Ifdniilfoii's Case (1916) 35 0. L. R. 626. 3. A copy of the ])y-hiw, certilicd iiiuh'r the seal of tiie c()m))aiiy, ninst l)e deposited with the Department and published in llic Canada Gazette. Thv section does not specifically state that such pul)lication shouhl take place after coiilinnat ion of the by-law, l)ut it is suggested thai this is adxisabh". Until the nMjuirements of the section are co7ii))lied KiTcctof witli the by-law is inellectivc, and an election ol an m- f^^pg creased board nnder snch a by-law is void and confers no right on those elected to hold office: Sherker v. Rudner (1911) .'>9 S. C. 44, and in the last mentioned 4^)2 DOMINION COMPANIES ACT. Sect. 76. t*aso it was lickl lliat an action lay in llio nature of quo irarriiuto proceedings under art. 987 ct seq. C. P. (Que.) to oust the director so irregularly .elected, and that a shareholder present at the meeting and not objecting could bring an action. A resolution to forfeit shares for non-payment of calls, passed by an illegal board, is invalid, and the forfeiture will be restrained: Christopher v. Noxon (1884) 4 (). R. 672. The com- pany was held in the same case to be properly made a partv to the action. See also Manes Tailorinrj Co. v. Wilfson (1907) 14 0. L. R. 89. Election of 77. Directors of the company shall be elected by the share- directors, holders, in general meeting of the company assembled at some place within Canada, at such times, in such manner and for such term, not exceeding two years, as the letters patent, or in default thereof, as the by-laws of the company prescribe. 2 E. VII., c. 15, s. 65. The above section requires that the board of direc- tors be elected by the shareholders. It is only in the case of vacancies occurring during the term of office of an elected board that the remaining directors under s. 78 (c) of the Act have the power to appoint direc- tors to complete the board. In view of the above requirement, it is doubtful whether it would be legal for a company incorporated under the Act to bind itself by agreement, or to pass a by-law, that one or more directors should be appointed by a named individual or by some outside body. In any event it is doubtful whether the contract by a company to elect as directors nominees of an outside body will be specifically enforced: Plantations Trust, Ltd. v. Bila Riihbrr Lands, Ltd. (1916) 114 L. T. 67(3; see also as to agreement that a shareholder shall have' the right of appointing or nominating a director of the com- panv: British Murac Syndicate v. Alperton (1915) 2 Ch.l86. The election must take place at a general meeting of the shareholders at some place within Canada, and the term of their office is limited to two years. Unless the letters patent or the by-laws prescribe that the ELECTION OF DIRECTORS. 453 term of ofifice sliall exceed one year the election of direc- Sect. 77. tors sliall take place yearly, s. 78 (a). It should be no.ted, however, that under s. 74 it is pro^dded that retiring directors shall continue in office until their successors are elected. Accordingly, retiring direc- tors would remain in office notwithstanding that their term of office had expired and that the shareholders had failed to elect a new board. Qiicere, whether directors can be validly elected at a meeting of shareholders held outside Canada. Possibly this may be done if all the shareholders attend or are represented at the meeting and no objection is taken. See Re Lands and Homes of Canada, Robertson's Case (1919) 44 D. L. R. 325, 327. Unless the by-laws provide that no shareholder shall be entitled to be present at a meeting or to be reckoned in a quorum whilst any call is due by him to the com- pany, possibly shareholders not entitled to vote may be entitled to form a quorum. In Doig v. Matheivs (1915) 25 D. L. R. 732, an interim injunction was refused where an election of directors was attacked on the ground that there was an insufficient quorum under the articles without counting shareholders present who were disqualified from voting, owing to their being in arrears in respect of calls. It is, accordingly, advis- able for the by-laws' to make special provision covering this point. 78. In thf! ahponce of other provi.^ioiis in ttiat bcliall', in tho if no other loltci-.s patent or ly-laws of the company, — provision. (a) the election of directors shall take place yearly, and all Voarly the directors then in office shall retire, hut, if otherwise ^^'^*^'*'"- r|iialifif'd, they shall he elifjiblo for re-election; (b) every election of directors shall be by ballot; I?yb.illot. (c) any vafancy occnrrinj^ in tlie l)oard of diroctors may b(> \',„<:iiinlGs filled, for the remainder of the term, by the director^ fiotn (illoil l)y among the qualified shareholders of the company: (d) the directors shall, from time to time, elect from among oflicors ap- themselves a president and, if they see fit, a vice-president pointod by /• 11 1 1 • J. II 1.1 o2 directors, of the eonipanv; and may also appoint all other oincers thereof. 2 V. VTL, c. 15, s. 06. -1-5-i DOMINION COMPANIES ACT. Sect. 78. Tlu' abuvr i)ro\isL()iis niav hv niodiiicd by the letters patent or by-laws of the company, subject, of course, to the restrictions imposed by the Act. (a) Yearly election. It slioubl be noted that it is provided by s. 74 that retiring directors continue in office until their success- ors are elected. An election of directors before the term of office of their predecessors has expired is apparently a nullity, and mandamus will lie to compel the company to pro- ceed to another election on the day fixed by tlie charter : The Queen v. The Bank of Upper Canada (1849) 5 U. C. R. 338. In that case Robinson, C.J., seemed to be of tlie opinion that quo ivarranto would be a proper pro- ceeding- where the object was not to call in question by what right an officer of a corporation pretends to hold office, but whether the corporation itself has not, as a body, acted in disregard of the provisions of its charter. If the by-law^s provide that the directors shall hold office for one year and until their successors are ap- pointed, the shareholders cannot themselves pass an- other by-law providing that the appointment is termin- able by resolution. They must wait until the next annual meeting and put in a new set of directors who will pass a new by-law: Stevenson v. Vohes (1896) 27 0. R. 691. Qiicere, whether shareholders cannot at any time call a special meeting by requisition under s. 87 of the Act and put in a new board. Where the letters patent authorize shareholders to depose directors, the notice of the meeting called for this purpose must clearly disclose what is intended to be done and not be so framed as to lead shareholders to believe that it is onlv intended to fill vacancies: Milot V. PorrauU, C. R. (1886) 12 Que. L. R. 193. (b) By ballot. Although the Act requires directors to be elected by ballot, an election by unanimous vote without ballot DIRECTOES FILLING VACANCIES. 455 will l)e valid if no more than the necessarj^ number of Sect. 78. directors are nominated: Morclen v. Heckels (1908) 17 ]\Ian. L. R. 557, and where the number of qualified shareholders is the same as that of the board, no formal election is necessary: Kiely v. Kiely (1878-9) 3 A. R. 438. (c) Vacancies filled by directors. The power given to the directors by this sub-section Power when to till vacancies is only exercisable in the interval be- ^^^"^^^^^^ ^• tween the vacancy arising and the next annual meeting. If the vacancy were not filled during that time, nor any directors elected at the annual meeting, the board would apparently not have power to elect a director after the date of the annual meeting: Kiely v. Kiely (1878) 3 A. R. 438, at p. 443. Tn Sovereen v. Whiteside (1906) 12 0. L. R. G38, Xo quorum. G4(), it was held that if less than the quorum under the by-laws is in office the remaining directors cannot fill vacancies under this section ; see also Neivhaven Local Board v. Neivhaven School Board (1885) 30 Ch. D. 350. It is difficult to reconcile all the cases dealing with the powers of continuing directors after the board has become incomplete by resignations or vacancies arising from. dis(|ualification. In Toronto Breiviny and Maltiny Co. v. Blake (1882) 2 O. R. 175, Proudfoot, J., held tliat on the ])oard becoming incomplete owing to the discpialifica- tioii of one of three directors, the directorate became iiicoiiipctciit to manage the affairs of the company. Semhle, also, even assuming that a quorum of two of the directors could manage tlu; business, yet where neither the statute nor by-laws gave the president a casting vote, resolutions passed by such a vote at a meeting attended only by the president and one other director were invalid. On the other li.iiid. In Chamicl Collieries Tnisl v. Dover, dec, Raihray (1915) 84 L. J. flh. 28, it was held that where two of the board of three ceased to be direc- tors, the sole remaining director could by appointment complete the board. This was a case uiidci- llic Com- 45G DOAIINION COMPANIES ACT. Sect. 78. paiiies Clauses Consolidation Act, 1845, s. 89 of which provided that the remaining directors, if they thought proper to do so, might elect some other shareholder in the place of the directors. Lord Cozens Hardy, M.R., pointed out that it is common for a company to have a board of directors which is merely the quorum and therefore, unless the continuing directors can fill up the vacancy the company would be at a dead-lock and nothing could be done except by the intervention of the Court in the manner suggested by Mellish, L.J., in Mac- dougall v. Gardiner (1875) L. R. 10 Ch. 606. It should be noted, however, that the Companies Clauses Con- solidation Act contains no provision corresponding to s. 74 of the Dominion Act. Presence of It was also held in Morden v. Heckels (1908) 17 (lirectors.^*^ Man. L. R. 557, that the presience, on the board of direc- tors, of three who were not qualified by reason of being in arrears in respect of unpaid calls at the time of their election, is not sufficient to invalidate the acts of the board done by a legal quorum of properly elected direc- tors. Power of Apparently the power given to directors by s. 78 (c) toeiect to complete the board, would not deprive a general meeting of the company of the power to elect directors where there are no directors, or where the directors do not think fit to exercise their power: Isle of WigJit Railway v. Tahoiirdin (1883-4) 25 Ch. D. 332. (d) Officers appointed by the directors. As to the effect of the words "from time to time" see Steindler v. Maclaren (1909) 14 0. W. R. 647. See the note to s. 32 dealing with the appointment of officers. The directors are also authorized by s. 80 (d) to pass by-law^s as to the appointment of officers of the company; such by-laws do not require confirmation by the shareholders, s. 81. Regfularity of elections. A director or officer whose election is obtained by trick or artifice, cannot be considered a bona fide direc- ELECTION OF DIRECTOKS. 457 tor, but wliere shares have been actually purchased and Sect. 78, paid for the fact of their being purchased with a view to influencing the election is not material: Toronto Brewing and Malting Co. v. Blake (1882) 2 0. R. 175; Failure to notify all the shareholders will nullify the election unless all the shareholders attend in person or by proxy, even though an absolute majority of the shareholders vote for the directors elected: Milot v. Perrault (1886) 12 Que. L. R. 193. Improper rejection of proxies is ground for setting aside an election of directors: Kelly v. Electrical (1908) 16 0. L. R. 232, 240; so also the fact that shareholders not entitled to vote because in arrear in respect of calls have been permitted to vote: Armstrong v. McGibhon (1906) Q. R. 15 K. B. 345. Persons whose names appear without qualification on the register as shareholders are entitled to vote, and it is not necessary that they should be beneficial owners of the shares, and the presiding officer may not adjudicate on the right to vote as between persons so registered and other persons claiming the shares: Tough Oakes v. Foster (1917) 39 0. L. R. 144. Where candidates for the board of directors acted as scrutineers and exercised their discretion as to the right of certain voters to vote, it was held that the duty of the scrutineers was so plainly in conflict with their interest as candidates that they were disqualified from acting, and tlie election was set aside: Dickson v Murray (1881) 28 Gr. 533. A meeting of shareholders called for twelve o'clock, opened by the shareholders present at one minute after twelve, which immediately elects a board, of directors and adjourns at ten minutes after twelve, is a fraud on absent shareholders: Armstrong v. Mcfiihhon (1906) Q. R. 15K. B. 345. In Ontario it has been lield that quo rvarranto will Quowar- not lie ill the case of an ordinary trading corporation: The Queen v. Hespeler (1854) l"l U. C. R. 22; see also Tn re Albert Mimng Co. (1873-5) 15 N. B. R. 29. It might spom, howovci-, 1h;it if tlie com])any wero exer- 458 DOMINION COMPANIES ACT. Miiiidaiiuis. Sect. 78. cisiiig functions of a semi-public nature, and had objects of public concern quo warranto proceedings could be taken : Be Moore and the Port Bruce Harbour ( 'o. (1857) 14 U. C. R. 365. This procedure is permis- sible in Quebec : Sherkerv. Budner (1911) 39 Que. S. C. 44; Gilbert v. Hall (1886) M. L. R. 2 Q. B. 374; Arm- sfroue/ V. McGibbon (1906) Q. K. 15 K. B. 345. In Be Moore and the Port Bruce Harbour Co. (1857) 14 U. C. R. 365, 367, the right to proceed by way of mandamus was also discussed, and it was considered that it should be confined to cases in which the election had been merely colorable and altogether void and not to cases where votes had been improperly received or rejected, or where the candidate's qualification had been taken exception to ; and the fact that an election was not attacked for eight months was considered as a ground for refusing relief, ibid. As to the right to proceed by mandatory injunction see Toronto B reiving Co. v. Blale (1882) 2 0. R. 175 Mud Oilman v. Bobertson (1884) 7 Legal News 60 S. C. As to the jurisdiction in equity to set aside an elec- tion it was said in a case in the Ontario Court of Chancery that, if a person subscribed for a large amount of stock for the purpose of voting for certain directors and with the assurance that when elected the directors would cancel his subscription, the Court of Chancery would have justification to set aside the elec- tion: Davidson v. Grange (1854) 4 Gr. 377. The obser- vation, however, was obiter in that case. Procedure. In Ontario an action is usually brought to set aside tlie election, and this must prima facie be brought in the name of the company: Kelly v. Electrical (1908) 16 0. L. R. 232 ; and one shareholder can not sue even though he brings the action on behalf of himself and all other shareholders: Eraser Biver Mining Co. v. Gallagher (1896-7) 5 B. C. R. 82. But where the company was a party defendant and all necessary par- ties were before the court, Mulock, C. J., held that it was proper to dispose of the case on its merits and set aside an irregular election of directors conditionally Maudatory iujunction. Equitable jurisdiction. ELECTION OF DIEECTOES. 459 Oil the plaintiffs' obtaining authority to use the name Sect. 78. of the company as plaintiff and amending their state- ment of claim, the existing directors to continue in office until the election of their successors: Kellij v. Electrical (1908) 16 0. L. R. 232. If the directors are elected illegally and it is not merely an irregularity that is complained of, a share- holder not only need not make the company a party to the action but his right to bring it is not precluded by acquiescence in the election: Sherker v. Ruduer (1911) 39 Que. S. C. 44. So also a minority can sue where it is charged that the directors who control a majority of the shares have brought about their election by fraud- ulent means: Davidson v. Grange (1854) 4 Gr. 377. Similarly where directors have become disqualified under the articles by contracting Antli the company at a profit any shareholder has a right of action for a declaration of such disqualification: Tlieatre Amuse- ment Co. V. Stoyie (1915) 50 S. C. R. 32. The general opinion seems to be that slight irregu- slight ir- larities in matters of form will not render an election [i^^ekctfons. void which has otherwise been fairly held. AVliere all subscribers to a memorandum of association concurred in the appointment of the first directors, the fact that they did not meet together for the purpose of coming to their determination did not invalidate their act; and also a resolution, passed at a general meeting, at which an election to fill vacancies might have been held, authorizing the existing directors to continue in iheir offices, was held tantamount to a re-election of them: Great Northern Halt d Chemical Works (1S90) 44 Ch. D. 472; and see remarks of Lindley, Tj. .)., in l\e Georf/e Newman d Co. (1895) 1 V\\. 074." Ill the liiitcd States corporate elections will he .Vmoncan scrutinized by the (/ourts, and will l)e set aside wiierc the successful i)arty lias succee(h'd by means of I'l-aiid and t rickery : People v. Albany llif Co., 55 |-5aiik ( X .^'. ) 344. r>n1 mere irregularities in matters of foi-m will not a\'()i-ents in the trans- actions wliicli they enter into on liehalf of the com- pany: G. E. Rij. V. Turner (1872) 8 Ch. 149, p. 152. However, it is immaterial what term is used, so long as their true position is understood, '^ which is that they are really commercial men managini;' a trading company for the benefit of themselves and of all the other shareholders in it," per Jessel, M.R., in Jn re ' Forest of Dean, etc. Company (1878) 10 Ch. D. 450 at p. 452. Directors The rulc that directors are agents in the transac- areagen s. ^j^j-^g which they enter into on behalf of the company is established by numerous decisions. TJie company itself cannot act in its own person for it has no i)erson. It can only act through directors^ and the case is, as regards tliose directors, merely the case of principal and agent, for where an agent is liable the directors would be liable; where the liability would attach to the principal the liability is the liability of the com- pany: Ferguson v. Wilson (1866) L. R.^2 Ch. 77. Where directors contract in their individual names without disclosing that they are in truth acting for the company they will be personally liable to the other party to the contract: Litchfield v. Saskatchewan &c Co. (1907-8) 7 W. L. R. 475. A mere description of the contracting individuals as the directors of the com- pany named will not release them from personal lia- bility; so it was held, where a contract in writing read that '' We, tlie directors of the A. B. Company, Lim- ited, hereby agree," etc., that the directors were liable inasmuch as the written contract did not purport to hind the company: Aggs v. Nicholson (1856) 1 H. & X. lQv);McCollin v. Gilpin (1880) 5 Q. B. D. 390. It is probably a question of fact upon the construction of the agreement not on extrinsic evidence, whether tlie directors are bound personally or not. But although the directors are named as the con- tracting parties, if they are described as contracting POSITION AND POWERS OF DIRECTORS. 467 ii on behalf of the company " or ^' for the company," Seos. 80-81. the company alone is bound in the absence of any stipulation that the directors as well as the company are becoming responsible: Gadd v. Houghton (1876) 1 Ex. D..357. Such limitation may be either in the body of the contract or added by way of qualification to the signature. Ibid. Directors are trustees for the company of the xVmi trustees company's property: Re Sharpe (1892) 1 Cli, 151 ; ^o^pany. Forest of Bean, etc. Company (1878) 10 Ch. D. 450; They cannot use the company's property for their own benefit : Pure Canadian Silver Black Fox Co. v. Morri- son (1915) 24 D. L. R. 915. They are not, however, trustees for shareholders individually: Percival v. Wrifjkt :(1902) 2 Ch. 421; nor for the company's creditors, Poole's, Jackson's, Whifte's Cases (1878) 9 Ch. Div. 322; Wilson v. Bury (1885) 5 Q. B. D. 518; Ferguson v. Wilson (1866) 2 Ch. App. 77; Bank of Toronto v. Cobourg etc. Railway Company (1885-6) 10 O. K. 376; A.-G. V. Standard Trust (1911) A. C. 498. They are not bound to invest the company's funds in trustee securities, and may invest them in the name of a sole trustee: Burland v. Earle (1902) A. C. 83. As trustees the conduct of directors is to be considered with reference to the particular business they are appointed to manage, but i1 has been repeatedly held that directors who h.ive misapplied funds were liable for "breach of trust," Faure Electric Company (1888) 40 Ch. D. 150; Masonic d General I Afe, etc. Co. v. Sharpe (1892) 1 (Mi. 154. See Smith v. Anderson (1880) 15 Cli. I). 275; Therien v. Brody (1893) 4 Que. S. C. 23. Where a director has made himself liable for a bi-eacli of trust he is bound to reiiiihurse the a)ii\\r,i\i\' : Joint Stock Discount v. Ihoictt (ISO!)) L. K. 8 Eq. ,381. If the directors have abused their position so as to get an advantage at the expense of the com- pany, it is foi- the corporation oi- its sliareliolders to comT)hrni, and not foj- an outsider; and debenture holders, wlio liad ()))tained tlnii- delx-ntnres after cer- tain directors of tlie company had caused deben- 4G8 DOMINION COMPANIES ACT. Seos. 80-81. tiirc's to be issued to lliemselves at a discount of twenty-live per cent, in satisfaction of their claims aii'aiiist the company, wei-e held to have no status to attack the issue made to the directors as being invalid because of the discount: Ba/nk of Toronto v. Cobourg Ry. (1885) 10 0. li. 376. The transaction was not ultra vires nor was it void, and could only be com- plained of as unfair by the company or a corporator: Ibid.; and see Greenstreet v. Paris (1874) 21 Gr. 229. When In ordinary cases no fiduciary relationship exists shareholders, between tlic dircctors and the shareholders of the com- pany as such: Percival v. WrifjJit (1902) 2 Ch, 421; but under special circumstances the shareholders may be entitled to set up that a fiduciary relationship has been established and to treat the directors as trustees for them. So where directors of a company w^ere approached with a view to effecting a merger to be carried out by a sale of the assets of the company of which they were directors, and the directors secured the consent of the majority of the shareholders and surreptitiously acquired shares of the new company for their own profit, it was held that the directors became the agents, in the transaction, of the share- liolders, and that the latter were entitled to treat the directors as trustees for them of the profit made : Allen V. Hyatt (1914) 17 D. L. R. 7. See also Gadsden v. Bennetto (1913) 3 D. L. R. 719, where directors, hav- ing conspired to dispose of .the company's property and make a secret profit, acquired shares at an under- value from the sharehohlers by supi)ressing the terms of the offer received for the company's property, and were held to be trustees for the sliareholders of the pro- fits made. It was also held in the same case that where a committee of the directors is appointed for the pur- pose of disposing, not only of the property of the company, but also of the shares belonging to individual shareholders, the responsibility of the members of the committee is different from that of ordinary directors, they being confidential agents of the shareholders as well as of the company. POSITION AND POWEES OF DIRECTORS. 469 Directors may also stand in a fiduciary relationsliip Sees. 80-81. as regards future subscribers of shares where new Liability shareholders are brought into the company: In re Hess *°^"V"f, Mfg. Co., Edgar v. Sloan (1894) 23 S. C. R. 644. In ' such cases where a director has committed a breach of the fiduciary relationship to future subscribers by failure to make proper disclosure in respect of a con- tract entered into with the company, the latter will not be bound : Denman v. Clover Bar (1913) 48 S. C. R. 318. See also Craivford v. Bathurst Land dc. Co., (1916) 37 0. L. R. 611; (1918) 42 0. L. R. 256; (1920) 50 D. L. R. 457. It is a director's duty to give his whole ability, Fiduciary business knowledge, exertion and attention to the best interests of the shareholders who have placed him in that position: Re Iron Clay Brick Mfg. Co. (1889) 19 0. R. 113, 123. Prima facie, however, a director may act as a director of a rival company: London, Sc, Co. V. New Mashonaland Co. (1891) W. N. 165. It is incumbent u]ion a director to assume no part wliich would be inconsistent with a proper, free and inde- pendent discharge of his duties in that respect. No one occupying a fiduciary relationship can be permit- ted to do an act on his own personal behalf wliich miglit or could be construed to be inconsistent with tlie fiduciary character which he held at the time: Re Iron Clay Brick Mfg. Co., supra. So where a director was to be paid a commission of 121/2 per cent, for selling tlie company's stock, but sold none, and made an arrangement with anotlier person whereby tlie latter was to sell on a 5 per cent, com- mission, which was held to be a fair commission, the director was bf'ld liable to account to the company for the .lifToronfo: SfirVney v. Ruckrl (1905) 6 O. W. R. 751. See also on the duties of directors: Gignere v. Colas (1915) 48 Que. S. C. 198. Directors are fiduciary donees of their powers. Directors e.g., of making calls: Air. rand cr v. Autowafir (1899) ,]onpe^?f 2 Ch. 302; of issuing and allotting shares: Madden v. powers. 470 DOMINION COMPANIES ACT. Se2S^80-Sh Dim 0)1(1 (11)04-7) 12 H. C. R. 80; .IJarfiii v. (Jihsoii (li)08) 5 0. L. 11. G23; perinittiiig transfers ot* unpaid ^hiwe^iPefcrborouf/h Cold Storafje Co. (1907) 14 O. L. ]\\ 480; rorfeiting shares: Blisset v. Daniel (1853) 10 Hare, 483; and their powers must be ex(>rcised bona fide for the company's benefit: Madden v. Dimond, suijra; Budolph v. Macey (1906) 3 W. L. R. 52. So also they must not sell the company's property at an undervaluation: Daniel v. G oldJi ill' {'[S99) G B. C. R. •495; Boyle v. Bothsehild (1907) 10 0. W. R. 696. Purchase _ A director is not precluded from purchasing- the property. ' coiiipauy's property after the fiduciary relationship has come to an end: Chatham National Bank v. McKeen (1895) 24 S. C. R. 348. A director is in the same position as a trustee. If his position is fully disclosed and every precaution taken the transaction \\ill be good. Even where a director of a joint stock company who had a judgment against the company and on a sale of the company's property under a mortgage held by a third party, purchased the same for his own benefit, he was held to be a trustee thereof for the company and accountable for any profit received on a re-sale : Be Iron Clay Brick Mfg. Co. (1889) 19 0. R. 113. The very fact of the director's appearance at the sale, the ])ublic knowing that he was a director of the company whose lands were being sold, would have the effect of dampening the bidding, and the chances of a good, ftdr price being realized were greatl}^ lessened thereby and the director was in that respect guilty of a breach of trust, ibid. Directors are not at liberty to sacrifice the interests of the company and while ostensibly acting for the latter, divert in their own favor business which would properly belong to the company they represent. Thus, where directors, while still retaining their position as such, and still actually acting as managers of the company, negotiated for a contract on their own behalf in exactly the same manner as they had always acted for the company, and caused such contract to be made POSITIOX AND POWEES OF DIRECTORS. 471 and to be taken over by a new company formed by Sees. 80-81. the directors, and thereafter used their voting power as shareholders to ratify and approve what was done and to release all claims against themselves as direc- tors, it was held that the directors must be regarded as holding the benefit of such contract on behalf of the company, and that the transaction could not be regu- larized by resolutions of the company controlled by votes of the directors: Cook v. Decks (ioiG) A. C. 554; 85 L. J. P. C. 161. On the other hand if directors bona fide and reas- onably believe that they are acting in the company's interest they are not liable for breach of trust because in so acting theyare also pursuing their own interest; Hirsche v. Sims (1894) A. C. 654 at p. 660; Lagunas v. Lagunas Syndicate (1899) 2 Ch. 392. Transfer of directors' shares. Ordinarily no trust rests upon the directors in Transfer favour of the other shareholders as to the transfer of f ^!'^^'<*'"^' the directors' shares; they have the power under ordinary circumstances to consent to a transfer of their own stock. A director is not a trustee for the general body of the shareholders so as to be unable to deal with his shares in a manner prejudicial to the interests of his cestiiis que tnistent, but is as free to deal with his stock, except perhaps his qualification shares, as any other person : Re National Provincial Co., CdberVs Case (1870) L. R. 5 Ch. 559; Thompson V. Canada, etc. Ins. Co. (1885) 9 0. R. 284. But if the directors are guilly of keeping the com- pany in the dark as to the state of its affairs, until they, the directors, have transferred their shares for the purpose of getting rid of their own liability thereon, the Court will interfere to declare the transfer invalid: Murrag v. Ihish (1872) T.. R. 6 IT. T.. 37. Tt does not appear to have yet been definitely decid- ed whetiiei' a direcloi' can, while holding that position, make a valid transfer of his (lualification shares. Lord Roniilly, M.R., in CilJiert's Case, /^• Xaf}())ia.l Piori)!- 472 DOMINION COMPANIES ACT. Sees. 80-81. cial Co. (1870) L. R. 5 Oil. 559, tlumo-lit lie could not do so to avoid an ini pending call. lu Re South London Fish Market Co. (1888) 39 Ch. D. 324, 331, Mr. Justice Kay said: " Looking at the doctrine of this Court, that a voluntary transfer to escape liability in some cases, is a fraud, I cannot doubt that a director voluntarily transforring his qualification shares in order to escape liability, is committing a fraud. But it would seem that where the transfer is made without any design of escaping liability it will be effective to pass the shares to the transferee. The power to transfer his own shares is not given to' him as director, but as one of the shareholders; and he should not be prevented from exercising that right to transfer, simply because he does it not for the benefit of the shareholders, but for his own personal benefit" : Re Cawley S Co. (1889) 42. Ch. D. 209, 233. See also notes to s. 75, supra. Secret Directors are trustees in the strictest sense for tnVssion^^''™c. the company, of secret profits, and will be bound to return them oven though the company is no wov&e off as a result of such profits having been made: Ruethel V. Thorpe (1907) 9 0. W. R. 942; (1907) 10 0. W. R. 222. Tn an action to make directors account for profits the company should be made a party to the proceed- ings: Meyers v. Cain (1905) G O. W. R. 834. It is a breach of the fiduciary relationship for the directors to make a secret profit at the expense of the shareholders: Gadsden v, Brnnetto (No. 2) (1913) 9 D. L. R. 719; Craivford v. Balhnrst Land dc. Co. (1916) 37 0. L. R. 611 (1918) 42 D. L. R. 257; but see the same case in (1920) 50 D. L. R. 457, where the judg- ment below was reversed by a majority of the Su- preme Court of Canada; and whore a director has wrongfully diverted the company's funds to his own use, the company is entitled notwithstanding die con- sent of his co-directors, to claim the funds and interest thereon: Rogers Hardwar'i v. Rogers (1913) 10 D. L. R. 541, but apparently not compound interest: Saskat- POSITION AND POWERS OP DIREGTOES. 473 clieivan Land d Homesfpad Co. v. Moore (1915) 7 0. Sees. 80-81. W. N. 684; (1915) 8 0. W. N. 525. Where a director is held liable to account, the company has the option of claiming the property itsell', or its highest value whilst held Iw the director, and the latter is not released by proof that he paid for the property a sum which, at the time he bought it, was its then full market value: Eden v. Ridsdales Co. (1889) 23 Q. B. D. 368 (C.A.) ; Re Iron Clay Mfg. Co, (1889) 19 0. R. 113, 121. Upon the appointment of a liquidator for a com- Termina- pany whicli is being wound up under the Winding- fXc?Ir.v up Act, R. S. C. 144, the fiduciary relation b(3tween i-eiationsMp. the directors and the company is at an end unless their powers as directors have been continued as provided by s. 31 of that act : Chatham National Bank v. McKeen (1895) 24 S. C. R. 348. See also Holmested v. Annahle (1914) 18 D. L. R. 3; Cooh V. Deeks (1916) 85 L. J. P. C. 161, at p. 163. Thus where the company was in liquidation and liad practically refused an extension of a lease the directors were held entitled to obtain an extension per- sonallv and for their own benefit: Boston Shoe Co. v. Frauk (1914) Que. 48 S. C. 66.. The mere resignation of a director to take effect contemporaneously witli the execution of a contract between the company and the directors, advantageous to the latter, will not assist the director as regards fail- ure to comply with the fiduciary liability to make full disclosure to the company : Denman v. Clover Bar Coal Co. (1913) 48 S. C. R. 318; 15 D. L. R. 241. In the absence of agreement there is no duty or other cases, obligation cast on the directors to pledge their own credit fo?- the benefit of the company: Christopher v. Noxon, Be Inr/ersoll Gas Co. (1884) 4 0. R. 672, 682. If there be fraud, or, if in llx- absence of i)roof of actual fraud, the facts make oiil a case of liarslj treat- nu'Jit being practised ])y tlie majority of tlie directors against the minority, the court will interfere: Waddrll V. Ontario CanninffCo. (1889) 18 O. \l. 11. 474 DOMINION COMPANIES ACT. Sees. 80-81. So it" it bo shown that tho majority aro banded ' tog-other against tho minority for tho express purpose of taking advantage of their position, to obtain a per- sonal benefit to themselves at the expense of those who are in the minority, the Court will interfere. Ihidj. Whore a director of a company, who was also it:^ president, was appointed by the board of directors to be the solicitor for the company, and acted as such, it was held in winding-up proceedings that he was in the position of a solicitor acting on behalf of himself and co-trustees, and was therefore not entitled to re- cover profit costs in respect of legal business done for the company, other than causes in Court: Re Mimico Seiver Pipe Co. (1895) 26 0. R. 289; Cradoch V. Piper (1850) 1 Macn. & G. G64; Re Corsellis (1887) 34 Ch. D. 681; Re Barber (1886) 34 Ch. D. 77. A by-law for increasing the capital stock of a joint- stock company prescribed the manner in which tlie new shares should be allotted, and provided that the allotment should be made, save as to twenty-one shares, by the shareholders. This by-law^ was sanc- tioned by tliQ shareholders at a general meeting, and it was the basis of the new^ issue : — Held, that the direc- tors had no power to pass a by-law directing its repeal, and providing for the allotment of the shares by themselves. A by-law was passed by the directors, and subsequently confirmed by the shareholders, pro- viding that the directors should hold office for one year, and until their successors were appointed : — Held, that this by-law could only be repealed at the next annual general meeting of the company, and therefore a by- law passed, during the directors' year of office, by the shareholders at a special meeting of the company, providing that the appointment should be terminable by resolution, was invalid: Stephenson y. Yokes (1896) 27 O. R. 691. A by-law or resolution of the directors will be in- valid and ultra vires of the company if it operates un- equally towards the interests of any class of the share- holders: Northwest Electric Co. v. Walsh (1898) 29 S. C. R. 33. POSITION AND POWERS OF DIRECTORS. 475 The mere fact that persons in a board of directors Sees. 80-81. are interested in the affairs of another corporation, which is a controlling stockholder in the former, does not afford a ground of presumption against the legal- ity and fairness of dealings and transactions between the two companies, although it may subject their con- duct to rigid scrutiny by the Court: Davis v. United States Electric Potver Co., 77 Md. 35. Where by the incorporating statute a one-fourth part in value of the shareholders of the company have a right to call a special meeting thereof for the transaction of the company's business, it is not open to the directors further to limit that right by by-law, and to require at least one-third of the shareholders: Austin Mining Co. v. Gemmell (1886) 10 0. R.. (){)(;, 705 ; Re Cambrian Peat S Fuel Co (1875) 34 W. R. 405. 2. Contracts of directors with the company. The right of a director to contract with the com- l)any is of the narrowest description. lie may sub- scribe for the company's shares and bonds in the usual way: CamphelVs Case (1876) 4 Ch. D. 470, but otlier- wise, unless authorized by the by-laws or by resolution of the shareholders, a director is disqualified from entering into contracts with the companv: Albion v. Martin (1875-6) 1 Ch. D. 580; Roray v. Howe Sound, (J915) 22 D. L. R. 855. No statutory prohibition is i-(M|uired to invalidate a contract made between a director and t.lie coiiii)aiiy, for the director's disability from contracting with the company follows from his fiduciary position as trustee. In Nortli-West Tra)is- portation Co. v. Reafti/ (1887) 12 A pp. Cas. 5S1), Sir Ricliard Baggallay said, *'A directoi- of a company is j)i'eclnded from dealing, on behalf of tlie company, with himself, and from entering into engagements in which lie has a pei'sonjd inlerest conflicting, or which possibly may conflict, wllli the iiilerests of fliose whom he is lunind by fidnciaiy (hdy to protect; and this rule is as applicable to the case of one of several directors as to a managing or sole director." See also Renson v. Healhorn (1842) 14 Y. & C. Ch. 326. It is imma1.Ti,il 47G DOMINION COMPANIES ACT. Sess. 80-81. whotlior the terms of the contract are the best that coiihl be obtained: Madden v. Dimond (1905) 12 B. C. R. 80. Xo^ iiKui can l)e aUowed to put himself in a posi- tion in which his interest and duty will conflict: Parker V. McKcnna (1874) L. R. 10 Ch. 118. See also Aber- deen Raihvay v. Blaikie (1854) 1 Macq. H. L. 461. A director will be held to be contracting with the company within the meaning- of the above rule where the director is a shareholder in another company, whether beneficially or as a trustee, and without regard to the quantum of his holding: Transvaal Lands Co. v. Neiv Belgium Sc. Co. (1914) 2 Ch. 488; (1915) 84 L. J. Ch. 94. Contracts between the directors and a company are however common. The company may, and fre- quently does, by its by-laws, authorize contracts with its directors, subject to specified conditions. Different results follow, depending on whether there is or is not such a by-law in existence. No by-law. Where tliere is no by-law authorizing the directors to enter into contracts with the company no question of the fairness or unfairness of the contract can arise, and unless the contract is sanctioned by the share- holders the profit arising therefrom can be recovered : Imijcrial &c., Association y. Coleman (1871) 6 Ch. 558 at p. 567; Parker v. McKenna (1874) 10 Ch. 118; In re The Cardiff Preserved Coal Co. (1862-3) 32 L. J. Ch. 154. A general meeting of tlie shareholders can, how- ever, sanction a contract in which a director is inter- ested, in which event the director will be protected: Grant v. United Sivitclihack Co. (1884) 40 Ch. D. 135. See also Morison v. Thompson (1874) L. R. 9 Q. B. 480; Dunne v. English (1871) L. R. 18 Eq. 524; Eden V. Risdales Co. (1889) 23 Q. B. D. 368; Van Hummell V. International dc. Co. (1913) 10 D. L. R. 306; N. W. Transportation Co. v. Beattg (1887) 12 A. C. 589. The notice of meeting should set out particulars of the director's interest: Kage v. Croydon (1898) 1 Ch. 358; Tessier v. llrnderson (1899) 1 Ch. 861 ; Normandy V. Ind Coope S Co. (1908) 1 Ch. 84. POSITIOX AXD POWEKS OF DIRECTORS. 477 The director is not prevented from using bis voting Secs. 80-81. power as a shareholder for tlie purpose of procuring the ratification of a contract fair in its .terms: North- West Transportation Co. v. Beatty (1887) 12 App. Gas. 589. Modern by-laws either expressly authorize directors where there to enter into contracts with the company subject to their ^^ ^ ^'J'-iaw. making full disclosure of their interest and refraining from voting; or confer an implied authorization by providing that such directors shall not vacate their office by reason of being interested in contracts with the company provided they make full disclosure and re- l"rain from voting. See Costa Rica liy. v. Forivood (19U0) 1 Ch. 75G; (1901) 1 Ch. 716. As to what con- stitutes comx)liance with the conditions of the by-law see Imperial, Sc, Co. v. Coleman (1873) L. R. 6 H. L. 189. Unless the by-law expressly states that the direc- tor is not disqualified from contracting with the com- pany by reason of being a shareholder in another com- ])anv the general rule applies: Transvaal Lands, Sc, Co.v. Netv Belgium, dec, Co. (19U) 2 Ch. 488; (1915) 84 L. J. Ch. 94. If the provisions of the by-law autho- lizing the contract are not complied with, the contract is voidable as if no such by-law existed, ihid. Where tlie articles of a company imposed the jx'iialty ol" dlsciualilication on directors contracting with the company at a profit, the consequences of an in- fraction of the article were held to be not only dis- (lualihcation of tlie offending directors but the giving of a I'iglit of action to any shareliolder for a declara- tion of sucli disqualification and an account of the moneys imin'opcrly I'cceived. Nor could such a con- ti'act !)(' ratified l)y a majority of the shareholders as the matter was not merely one of internal management: Thratrr Awiisniirnt Co. v. f^tonc (1915) 50 S. C. R. 32. It is not necessary in order to vitiate a contract or ninvior arraiigeuiciit bcfwccn ;i director and his company that ,\^,',';y,'.!; "j" the director sliouhl actii;ill\' record his vote, where 478 Do:\iiM()x coMrANiES act. Sees. 80-81. several directors are interested in similar contracts and by arrangement each votes in favor of the other's contract: Thorpe v. Tisdale (1909) 13 0. W. R. 1044, 1049. AVliere tliere would be no quorum without the pres- ence of a director who is disentitled from voting on the contract he cannot be counted as being present for the purpose of making a quorum : Yuill v. Greymouth d Point FAizahetli By. S Coal Co. (1904) 1 Ch. 32; Be , D. (& 8. Drug Co., Douald's Claim (1916) 10 W. W. R. G12 (Alta.). Nor, if several directors are interested in what is in reality one transaction, can a quorum be obtained by splitting the resolution into parts and taking a vote on each part separately: In re North- E astern Insurance Co. (1919) 88 L. J. Ch. 121, Where the articles of association of a company pro- vided that a director might contract with a company but forbade his voting, and the director voted,in favor of the resolution appointing him managing director at a remuneration, it was held that there was a contract between the director and the company within the mean- ing of the article, and that the appointment was irre- gular, but that it could be cured by a vote of the com- pany in general meeting : Foster v. Foster (1916) 1 Ch. 532; 85 L. J. Ch. 305. But see the view expressed by Idington, J., in Wade v. Kewick (1906) 37 S. C. R. 32, at p. 53. See also Be Oiven Sound Lumber Co. (1917) 33 D. L. R. 487; 38 0. L. R. 414. Disclosure. There must be full disclosure by the director of his interest: Costa Bica v. Forivood (1900) 1 Ch. 756; and if there is full disclosure and assent by the company the director can retain his profit: A. G. v. Standard Trust (1911) A. C. 498; Bennett v. Havelock (1910) 21 0. L. R. 120; (1912) 25 0. L. R. 200. The duty to make full and complete disclosure is a fiduciary burden which can not be got rid of by resign- ing from the board on the understanding that the re- signation is to be contemporaneous with the formal execution of the contract: Denman v. Clover Bar Co. (1913) 48 S. C. R. 318; 15 D. L. R. 241. Though the contract be declared not binding on the company the POSITION AND POWERS OF DIRECTORS. 479 director may be awarded compensation on a quantum Sees. SQ-Sl. meruit for the services rendered the company on the ~ faitli of the contract set aside, ibid. The duty to disclose may extend not only to present but to future shareholders where it is intended to bring- in new shareholders by issuing shares to the public, ibid. See also Re Hess Mfg. Co., Edgar v, Sloan (1894) 23S. C. E. 644. Directors may lend money to the company and take security therefor and enforce payment as ordinary creditors, but such contracts must be made with the utmost good faith and are subject to the severest scrutiny: Neelon v. Town of Thorold (1891) 20 (). R. 86; (1894) 22 S. C. R. 390. See also on contracts between the directors and the company Ellis v. Norwich Broom and Brush Co. (1906) 8 0. \V. R. 25; i?p Norwalk Mining Co. (1915-6) 9 0. W. N. 41; Annotation in (1912) 7 D. L. R. 111. Where a director is selling to the company property saiesby which is his own in equity and law, if the company ^^^'"^j^*^^'^ claims an interest in the property by reason of the company, transaction it can only do so by affirming the sale, which tliough voidable becomes validated. The company can i-efuse to affii'm the contract and the contract will be set aside and the ])arties remitted to their original rights, but the company can not, if rescission is no h~)nger possible, keep the property and make the direc- tor take less than the price agreed: Burland v. Earle (1902) A. C. 98; Uurthel v. Thorpe (1907) 9 0. W. R. 942; (1907) ]()(). W. R. 222. On the otiici- hand if the director has made no dis- closure 1() tlie coni])aiiy llir latter can at its option either rescind tlic contract or retain the ])roperty and recovei- damages for the loss arising through non-dis- closure: (ihirksfein v. TUnncs (1900) A. C. 240; Leeds (C- Ifanlri/, ([■(■. (1902) 2 V,\\. 809. Where the director is dealing with pro])erty wliich though his own in law, was originally ac(iuired by him niider circumstajices which made it in equity the pro- perty of the company, the company can in such a case 480 DOMINION COMPANIES ACT. £e3s. 80-Sl. treat the profit on the resale to it as acquired on its beliair aiul make tiie agent account for it. This rule (Mily applies when the fiduciary relationship exists at tlie time of the acquisition of the property by the agent: Jacobus Mailer Estates, Lim. v. Marler (191G) 85 L. J. P. C. 167. Even where the company is not entitled to treat the property itself or the director's profit on the resale as acquired on the company's behalf, and is unable to re- store the agent to his original position, and has accord- ingly lost the right to repudiate the transaction, it may still have a remedy in damages against the director for negligently allowing the company to purchase the property at the price specified. The measure of dam- ages is the difference between the market value and the price paid if the property has a market value ; if it is specific property" having no market value the measure of damages will be the company's loss in the whole transaction, and the Court will fix a proper price be- tween vendor and purchaser and estimate the damages on the basis of such price : Jacobus Marler Estates, Lim. v. Marler (1916) 85 L. J. P. C. 467. Action to An action to set aside a contract between a director contract and the company or to make a director account for profits should primarily be brought by the company itself, or at any rate the company should be a party: Bennett v. Hav clock Electric, Sc, Co. (1910) 21 0. L. R. 12-0, at p. 125 ; Meyers v. Cain (1905) 6 0. W. R. 834; except where the persons against whom relief is claimed control the majority of the shares of the com- pany and will not permit the action to be brought in the name of the company: Burlancl v. Earle (1902) A. C. 83, at p. 93. The Court may, however, in a proper case, amend the pleadings or treat them as amended, so as to enable relief to be given where the company has not been made a party: Allen v. Hyatt (1914) 17 D. L. R. 7. See also Johnston v. Carlin (1914) 20 B. C. R. 520. 3. Powers of directors. Powers. In addition to the implied general authority given by s. 72, which provides that the affairs of the company DIRECTORS. 481 shall be managed by the board, s. 80 of the Act gives to Sees. 80-81. the directors the full powers of the company, subject to certain, limitations. The directors can do anything that the company can do, and if it is wished to be known whether a particular transaction is mthin the powers of the directors, it is simply necessary to examine the statute, charter and by-laws to see if there is an express provision requiring the authority of a general meeting of the shareholders. If there is not, the directors will have ample power: Re Patent File Co. (1870) L. R. 6 Ch. 83; Pyle Works No. 2 (1891) 1 Ch. 173. The introductory words of s. 80 confer on the direc- tors a general power enabling them to enter into tran- sactions for carrying on the ordinary business of the company. The directors may thus, for example, give to the company's bankers securities for advances under the Bank Act without complying with the provisions of s. 69: Trusts and Guarantee v. Abbott Mitchell (1906) 110. L. R. 403. As these powers are given to the directors, the management of the business cannot be exercised by the shareholders, nor can the directors be overruled or controlled by the shareholders: Quebec Agricultural Implement Co. v. Herbert (1874) 1 Q. L. R. 363; Cann V. Eakins (1890-1) 23 N. S. R. ^Ib; Dunsmuir v. Colon- ist (1900-3) 9 B. C. R. 290; Automatic Self Cleansing Filter Syndicate v. Cunningham (1906) 2 Ch. 34. If the shareholders are dissatisfied they can ;ip))<)int a new board at the next election of directors, or appeal to the courts if the directors are committing a breach of trust. See Taylor v. Chichester Ry. Co. (1867) L. R. 2 Ex. 356. The power to pass by-laws being given to the dircc- By-lnws— tors with respect to the matters mentioned in s. 80, P'^^^'TTi ^ ' sliareliolrlors. the j)()\ver of the shareholders to deal with the same oxdiKiod. matters is apparently excluded, except by way of con- sidering by-laws previously passed by the directors: Stephenson v. Yokes (1896) 27 O. R.*691, 696; Duns- D.C.A.— 31 482 DOMINION COMPANIES ACT. Powers vested in the board. Sees. 80-81. ;/////■;• V. CoIo}dst (1900-3) 9 B. C. R. 290; Beaudry v. Bead (1907) 10 0. W. R. 622, G25; KcUij v. Electrical (1908) 16 0. L. R. 232; Caym v. Eakins (1890-1) 23 N. S. R. 475; Colonial v. Smith (1912) 4 D. L. R. 814; 22 Man. L. R. 441. Some authorities have argued that the use of the term "by-laws of the company" in ss. 8 and 45 of the Act indicates that the shareholders have the right to initiate shareholders'^ by-laws, as distinguished from directors ' by-laws, which must be passed by the direc- tors and confirmed by the shareholders. See Sherker V. Budner (1911) Q. R. 39 S. C. 44, 47; but this view seems to be in conflict with the case of Good & Shci,nt,z (1911) 23 0. L. R. 544. The powers of the directors are vested in them col- lectively and must be exercised at the regular meetings of the board, or as provided by the by-laws, etc., and not by the directors acting individually: Schmidt v. Beatty (1916) 10 0. W. N. 230; Standard Construction Co., Ltd. V. Crabh (1914-5) 30 W. L. R. 151 ; 7 W. W. R. 719; Bent v. Arroivhead (1909) 18 Man. L. R. 633; Sivayze v. Grobb (1915) 8 0. W. N. 316;Almonv. Law (1893-4) 26 N. S. R. 340. See further, infra, under "exercise of powers" by directors. The following are examples of powers which the directors may exercise under their general authority. Even without express power it is the right of the directors to appoint necessary officers and agents and to provide for the manner of their payment : Falkiner V. Grand Junction By. (1883) 4 0. R. 350. And al- though the directors may go out of office and new directors be elected at the end of each year, they may engage managers and other officials for terms extend- ing over a much longer period : Howarthy. Singer Mfg. Co. (1893) 8 A. R. 264, 270. The directors being the active representatives of the company, may in a proper case exercise a power of compromise : Bath's Case (1878) 8 Ch. D. 334, but as to powers in respect of a subscription for shares when the validity of the subscription itself is contested see Fuches V. Hamilton Tribune (1885-6) 10 0. R. 497. Examples of powers. Appoint- ments. Power to compromise DIRECTORS. 483 The directors of a company have the right to assign Secs. 80-81. tlie property of the company to a trustee for the benefit of the company's creditors, \\ithout the formal sane- ^eSts with tion of the whole body of shareholders : Hovey v. creditors. Whiting (1886) 14 S. C. R. 515; see also Re Olympia Co. (1915) 25 D. L. R. 620. The directors have un- limited powers over the property of the company so to deal with it as to pay the just debts of the corpora- tion : Hovey v. Whiting, supra, per Ritchie, C.J., at p. 520. Directors may, without the sanction of the share- holders, make an acknowledgment of the company's in- solvencv for winding-up : Re Manitoba Commission Co. (1912) 2D. L.R.I. The depositing of goods in a warehouse by a nianu- Raising facturing mercantile corporation and the raising of ™°"^^" money on the security of the same is often such a matter as would fall within the competence of the direc- tors to cause it to be done through their manager: Merchants Bank v. Hancock (1883) 6 0. R. 285, 290; - Gihhs & West's Case (1870) L. R. 10 Eq. 312; Picker- ing V. Ufracombe Ry. (1868) L. R. 3 C. P. 235. In the case of a bank, it has been held that the directors may take such steps as seem necessary to protect its interest and to obtain advances: Re Ontario Bank (1910) 21 0. L. R. 30, affirmed sub nom.; McFarland v. Bank of Montreal (1911) A. C. 96. The directors may enter into a contract on behalf Contracts. of the company, notwithstanding that its full perform- ance would require an increased plant, but not if the increased jjlant had been required to carry on a new or different business: National Malleable v. Smith's Falls (1907) UO. L. R. 22, al pp. 28 and 29. The directors may accept a conditional bonus otiiowers of the directors as are expressly given to the Ito.iid by tlie Act can not be delegated, r.//., allotting stock or making calls : Be Bolt S Iron Co. Hovenden's rase.. (1884) 10 P. R. 434; Be Pakenham Pork Packing Co. ( 1 906) 1 2 O. Tj. R. 1 00. But where a company gives to ;iii cmjjloyee power over all the administration of the business of the company sul)Ject only to such direc- tion and control as it is the duty of the directors to exercise, that is not an ultra vires dologation of the <^li rectors' authority ])y the companv: Montreal Public Service Co. v. Champagne (1917) 33 D. L. R. 49 (P. C). Nor can the directors delegate to an executive com- Executive mittee of tlieir number the supervision of the com- '^''"'"'"^^• pany's affairs generally: Monarch TAfe v. Brophy 4S6 DOMINION COMPANIES ACT. Executive committee gees. 80-81. (HH)7) 14 0. L. K. 1; Tanguai/ v. Boi/al Paper Mills (1007) Q. R. 31 S. C. 398. The departnieiit has recently refused to permit a power of appointing an executive committee to be taken in the letters patent. Possibly, if the by-laws so provide, such of the powers of the board may be dele- gated to an executive committee as are not expressly required by the Act to be exercised by the full board. See the notes to s. 32. Where the articles of the company enabled the .board of directors to appoint a committee of their own number and to delegate to any such committee all or any of the powers of the board, and one of the direc- tors was appointed a committee with all the powers of the board, it was held that the delegation was valid and that a committee in such a case need not consist of more .than one person: Re Taurine Co. (1883) 25 Ch. D. 118. If the directors delegate their powers to a com- mittee without fixing a quorum of the committee, all of the members of the latter must be present to give effect to what they do : Re Liverpool Hotisehold Stores Ass'n (1890) 59 L. J. Ch. 624. Section 80 (d) enables the directors to pass by-laws as to the appointment of agents, officers and servants. It is generally necessary for directors to employ other persons to act for the company, and where this is the case those persons will also have power to bind the company within the limits of their agency; and as a rule their authority cannot be denied unless their em- ployment was beyond the powers of the directors or irregularly made, and unless in the case of such irregu- larity, the person dealing with the employee had notice of the irregularity: TJiompson v. Brantford Electric Co. (1898) 25 A. R. 340, 345. See the notes to s. 32. A company is liable in damages to its general man- ager for breach of contract of employment if by resolu- tion of the directors it materially lessens his authority under the contract and makes it impossible for him to Agents, officers and servants. DIEECTOKS. 487 discharge his duties thereunder: Montreal Public Ser- Sees. 80-81, vice Co. V. Champagne (1917) 33 D. L. R. 49 (P. C). ~ 5. Exercise of powers — Meetings. The directors must act at reguhirly constituted Meetings, meetings, in the absence of express power in the by- laws to the contrary, and where the meetings are not held on definitely fixed days due notice must be given to all the directors : Harben v. Phillips (1883) 23 Ch. D. 14; First Natchez Bank v. Coleman (1903) 2 0. W. R. ^bS] Harris v. English Canadian Co. (1905) 3 W. L. R. 5. See also O'Dell v. Boston (1897) 29 N. S. R. 385; Young v. Consumers' Cordage Co. (1896) Que. 9 S. C. 471; Re Cardiff Coal Co. (1911) 18 W. L. R. 165. Such a notice must be given a reasonable time prior Notice, to the meeting of the board, but if all the directors should be present, insufficiency of notice will be imma- terial : Broivne v. La Trinidad (1888) 37 Ch. D. 1. The by-laws commonly provide that meetings may be held without formal notice if all the directors are present or tliose 'absent have signified their consent to the meet- ing being held in their absence. A letter from the president of the company purporting to waive notice on behalf of the absent directors is not a signification of consent within the meaning of such a by-law: Cana- dian Ohio, dc, Co. V. Cochrane (1914-5) 7 0. W. N. 698. Receipt of notice itself can not be waived : Re Portu- guese Consolidated Copper Mines (1889) 42 Ch. D. ]G0; but provisions as to giving notice must be con- strued reasonably, so that directors who are absent from the country are not entitled to notice of meetings even though there is a provision in the articles for pay- ment of tlieir travelling expenses: Windsor, Ltd. v. Windsor (-1912) 17 B. C. R. 105; 3 1). L. R. 456. Five of nine provisional directors of a railway com- pany being a quorum, four of them met at Winnipeg pursuant to a valid notice under the statute, and ad- jouriifd \i) a day named, when six met at Toronto in allf'gcfl ])ursuance of adjournment, but without proper notice under the statute. Ilehl, that the meeting of the six directors did not constitute a duly organized meet- 488 DOMINION COMPANIES ACT. Sees. 80-81. iiig" of directors, tlioiigli liad all the directors who were 'at the iiieetiiig- at Winnipeg attended pursuant to the adjournment it might have cured the irregularity : Mc- Laren V. Fiskcn (1881) 28 Gr. 352. Where a bare majority of the directors call a direc- tors' meeting at a time that does not reasonably permit, of the attendance of a full board, and not acting bona fide in the company's interests but for the purpose of retaining themselves in office, and improperly control- ling the vote of shareholders' meetings pending, im- properly issue stock to themselves, the parties to whom the shares are issued will be restrained from voting on them at the meetings : Glace Bay y. Harring- ton (1910-1) 45 N. S. R. 268.' See also on notice Madden v. Dimond (1904-7) 12 B. C. R. 80, 90. Notice of the business to be transacted at a direc- tors' meeting, as distinguished from notice of the hold- ing of the meeting, is not necessary. Directors at meetings of the board can deal with all the affairs of the company requiring their attention whether ordin- aiy or not and previous notice of the special business is not a necessary condition of the proceedings being valid unless special provision to that effect is made in the charter or by-laws. In the case of extraordinary or special business it may be very prudent and right to give notice of it, but it is not legally necessary to do so : La Compagnie de Mayville v. Whitley (1896) 1 Ch. 788. The contrary opinion which had been previously ex- pressed by Robertson, J., in Waddell v. Ontario Can- ning Co. (1889) 18 0. R. 41, is not likely to be followed in Canada. Notice of business. Personal attendance necessary. Chairman. The directors must meet in person : Harris v. Eng- lish Canadian Co. (1905) 3 W. L. R. 5, and a director's vote cannot be cast by proxy at a meeting of the board : Re Portuguese Consolidated Co. (1889)' 42 Ch. D. 160, 165. If the chairman is to have a casting vote at meet- ings the by-laws or the statute must so provide : To- ronto Brewing, &c. Co. v. Blalie (1883) 2 0. R. 175, per Proudfoot, J., at p. 184. DIEECTORS. 489 The iDroceedings of the meetings of directors should Sees. 80-81. be recorded in the directors ' minute book, ^ As such a m]^^^^^^ book is not required to be kept by ss. 89 and 90, entries therefrom would not be prima facie evidence of ••he facts therein stated under s. 107. Although there be no minutes of a resolution the Court may accept parol evi- dence as to what took place at a meeting and presume that a resolution was passed or other action taken : In re Fireproof Doors, Ltd. (1916) 85 L. J. Ch. 444; Northwest Battery Co. v. Harr/raves (1913) 23 Man. R. 923; Boston Shoe Co. v. Frank (1915) 48 Que. S. C. 66. But see Claudet v. The Golden Giant Mines (1909) 15 B. C. R. 13. As to the effect of the presence of strangers at a Presence of meeting in the face of objection thereto by one of the ^ ^^^ directors, see Harris v. English Canadian Co. (1905) 3 W. L. R. 5. As to the regularity of proceedings at meetings of irregniari- di rectors, it should be remembered that while persons *'^^' 'dealing with a company are presumed to have notice of r"'^! Brit- the Act of Incorporation, the letters patent, and pos-ishBank v. sibly the constituent by-laws of the company, they are "'*^"'''° • not bound to inquire into the regularity of its "indoor management." They may presume that its internal management is regular, and, for example, one lending to a company which has power to borrow with the sanc- tion of a general meeting is not put on inquiry as to whether that sanction ])as been given in the prescribed WMv : Roi/al British Bank v. TurqiiaHd (1856) 6 E. & B. 327; Barf/ate v. Shortridf/e (1855) 5 H. L. C. 31S; Mont- real £ St. Lawrence, &c., Co. v. Robert (1900) A. C. 196; Goulet v. Hydraulic Co. of Portneuf (1917) Que. 52 8. C. 58. On this point see notes to s. 69. But apart from the rule in Royal British Bank v. Tnrquand, an act done by a majority of tlie directors informally and privately is not, in the absence of ex- press authorization, ])iiidiiig on tlie company. '^I'lius, where the secretary liad fixed tlie seal of ;i com])Mny to a bond after obtaining tlic jnitlioiity of two dirocti.rs privately, and the promise of the tliij-d to sign an •lyO DOMINION COMPANIES ACT. Sees. 80-81. nil tJiorizatioii, it was hold that the bond was void: D'Arcy v. Tamar, etc., Ry. Go. (1867) L. R. 2 Ex. 158; 14 W. R. 96 ; Be County Life Ass. Go. (1870) L. R. 5 Ch. 288; In re Haycmft, dec. (1900) 2 Ch. 230; Paul v. Kohold (1905) 2 W. L. R. 90, 95. Where directors have acted irregularly and there is notice of the irregularity in the proceedings, the rule in the Turquand Case does not apply : Howard v. Patent Ivory Co. (1888) 38 Ch. D. 156. Nor does the rule apply as between the company and an officer thereof: Courchene v. Viger Park Go. (1915) 24 Que. Iv. B. 97 ; 23 D. L. R. 693. Quoi-um. The acts of directors at meetings where there is not a quorum are voidable by the company, subject, of course, to the rule in the Turquand Case, supra. But where a quorum is present at a meeting, a majority of those present and constituting the quorum, may validly act for the company: Withnell v. Gartham (1795) 6 T. R. 388; Rex v. Bower (1823) 1 B. & C. 492; Gortis v. Kent Water Works (1827) 7 B. & C. 314; but as to the- effect of a provision such as that contained in s. 72 of the Act that the affairs of the company shall be man- aged by a board of not less than a fixed number of directors; see Lindley on Companies. 6th ed., vol. 1, p. 205, and Card v. Garr (1856) 1 C. B. N. S. 197 ; Ex p. Birmingham Banking Co. (1868) L. R. 3 Ch. 651, and notes to s. 72, supra. When the by-laws do not prescribe the number of directors required to constitute a quorum the number who usually act in conducting the business of the com- pany may constitute a quorum, and in such a case a forfeiture of shares by two directors present out of a board of six was held valid: Lyster's Case (1867) L. R. 4 Eq. 233. See also In re Fireproof Doors, Lim. (1916) 85 L. J. Ch. 444. Directors disentitled from voting. by reason of being interested in a contract before the meeting for its consideration can not be counted towards making a quorum: Yuill v. Greymouth Point Elizabeth Co. (1904) 1 Ch. 32; i?e D. S S. Drug Co.; Donald's Claim DIRECTORS. ' 491 (1915) low. W. R. 612 (Alta.). In International Sees. SO-Sl. Mining Syndicate v. Stetvart (1914) 48 N. S. R. 172, it was held that two out of four provisional directors con- stituted a quorum, where one forfeited his shares and the other refused to attend, having acquired interests adverse to the company. One director cannot constitute a meeting: Re D. S S. Drug Go. (1915) 10 W. W. R. 612 (Alta.). The formal acts of the directors at meetings of the Resolutions. board are expressed in the form of resolutions or by- laws. In some cases, e.g., borrowing of money (s. 69) increase of capital (s. 51) and change of head office (s. 76) a by-law is required, otherwise a resolution will suffice. The distinction between a resolution and a by- law is that a "resolution applies to a single act of the corporation, while a by-law is a permanent continuing rule, which is to be applied to all future occasions": Thompson on Corporations, 2nd ed., vol. 1, s. 977, •quoted in Mackenzie y. Maple Mountain, Sc, Co. (1910) 20 0. L. R. 615, at p. 618 by Osier, J. A., who held that while a resolution is not necessarily a by-law, a bv-law may be enacted in the form of a resolution, where the object to be accomplished is the subject of a by-law, i.e., a rule of law of the corporation for its gov- ernment. In actual practice the distinction is not always apparent, e.g., where an executive officer is appointed by by-law or a specific borrowing is author- ized under s. 69. See also Denault v. Stetvart (1918) Que. 54 S. C. 209. Where tlie powers of the directors with reference to By-laws, the subject matters enumerated in ss. (a) to (g) of s. 80 are exercised by by-law, sucli by-laws except those respecting agents, officers and servants of the com- pany, have force (unless in the meantime confirmed at a general meeting) only until the next annual meeting of the shareliolders. Unless such by-laws are then con- firmed they thereupon cease to be valid, s. 81. The power of tlie directors to pass by-laws under the section is subject to the further restriction tliat 4!>'J IXmiNION COMPANIES ACT. Sees. 80-81. such by-laws must not be contrary to law, e./y., by pro- viding- for tlic issue of shares at a discount: North- West Electric Co. v. Walsh (1898-9) 1^9 S. C. R. 33; or to the letters patent, wiiere these contain special provisions; or to Part I of the Act, e.fj., by provid- ing for the payment of dividends which would impair the capital of the company, which is forbidden by s. 70 of the Act. The power to pass by-laws being given to the direc- tors the shareholders are precluded from doing so : Beaudnj v. Read (1907) 10 0. W. R. 622, 625; Mac- kenzie v. Maple Mountain, Sc, Co. (1909) 20 0. L. R. 170, 172, 173; Kelly v. Electrical Construction Co. (1908) 16 0. L. R. 232; Colonial v. Sinith (1912) 22.' Man. L. R. 441 ; 4 D. L. R. 814. 6. Personal liability of directors. "If directors act within their powers; if they act with such care as is reasonably to be expected from them, having regard to their knowledge and experience — and if they act honestly for the benefit of the com- pany they represent, they discharge their equitable as well as their legal duty to the company" : In re Na- tional Bank of Wales (1899) 2 Ch. 629," per Lindley, M. R., in the Court of Appeal adopting the statement of the law laid down in Lagunas Nitrate Co. v. Lagunas Syndicate (1899) 2 Ch. 392. Directors are bound to use a fair and reasonable diligence in the management of the company's affairs, and to act honestly, but they are not bound to do more : Be Forest of Dean Coal Co. (1879) 10 Ch. D. 450, 452; Northern Trust Co. v. Butchart (1917) 35 D. L. R. 169. Middleton, J., in Re Oiven Sound Lumber Co. (1915) 34 0. L. R. 528, at pp. 529 and 530, laid down a more stringent rule, stating that more than honesty is re- quired and that reasonable intelligence and diligent attention to business are also essential. This state- ment was commented on by Hodgins, J.A., in the Ap- pellate Division (1916-7) 38 0. L. R. at pp. 421 and 422, where it was suggested that this was rather a counsel DIRECTORS. 493 of perfection than an accurate statement of the true Sees. 80-81. position of directors. See also Prefontaine v. Grenier (1907) A. C. 101, at p. Ill-, No rtheru Trust v. ButcJiart (1917) 35 D. L. R. 169; Stavert v. Lovitt (1907-8) 42 N. S. E. 449. Directors are liable for active misfeasance in office : Re Lake Ontario Navigation Co., Hutchinson's Case (1909) 3 0. W. R. 1037 and see the notes to S..123 of the Winding-up Act, infra. A director is not bound to bring any special qualifi- cations to his office : In re Brazilian Rubber, dc., Limited {No. 1) (1911) 1 Ch. 425, and a provision in the articles to relieve directors from the consequence of negligence not dishonest will be valid, ihid. Directors who are a party to a fraud or the com- Misfeasance. mission of any other wrong are personally liable on the general principle that a. servant or agent who commits a wrong is liable for damage resulting as well as his principal. But an innocent director is not liable for the fraud of a co-director in issuing to the sharehold- ers false and fraudulent reports. "A director cannot be held liable for being defrauded by his co-director; to do so would make his position intolerable." A direc- tor is not bound to examine minutely each of tlie com- pany's books, nor is the doctrine of constructive notice to be so extended as to impute to him a knowledge of the contents of the books: Re Denliam S Co. (1883) 25 Ch. I). 752 ; Land Credit Co. of Ireland v. Lord Fermoy (1870) L. R. 5 Ch. 772. Directors will not be personally liabh' when they have been misled by misrepresentation oi- concealment by the regularly authorized executive officers of the company where there was no reason to doubt iheir {\(M\{y: Prefontaine v. Grenier (1907) A. C. 101, 109; Ranee's Case (1870) L. R. 6 Ch. A[)p. 104, 118. See also Prudential Trust Co. v. McQuaid (1919) 45 D. L. R. 346. Thus tli(-y arc not bound to verify the calcula- tions of the company's auditors : Dorey v. Cnru MOOI ) A. C. 477, 486. 45)4 DOMINION COMPANIES ACT. Sees. 80-81. Diroctors will be liable for acts of gross negligence : Negligence. Northern Trust v. But chart (1917) 35 D. L. R. 169; Stavert v. Lovitt (1907-8) 42 N. S. R. 449, bnt a mere default of judgment or error in a matter of discrimi- nation is not negligence, and directors were held not liable for an improvident loan to one of themselves: TurqmmdY. Marshall (18G9) L. R. 4 Ch. 376. It was there said that whatever may have been the amount lent to anybody and however ridiculous and absurd the conduct of the directors might seem, it was the mis- fortune of the company that they trusted such un- wise directors, and to fix them with liability something more must be alleged, as for instance that the lending \\Tis fraudulent and improper. Directors have a large discretion, and while acting honestly within it cannot be charged with misfeasance. Thus, when a director was cognizant that promotion money had been improperly paid on the formation of a company, but took no steps to recover the money for the company, it was held that he was not liable for his misfeasance: Re Forest of Dean Coal Mhiing Co. (1878) 10 Ch. D. 450. Similarly when in their discre- tion directors allowed calls to remain unpaid they were not held liable : Re Liverpool Household Stores, 59 L. J. Ch. 618. A director who does not really exercise his judg- ment will be liable : In re New Mashonaland Explora- tion Co. (1892) 3 Ch. 577, Where the alleged misfeas- ance is neither ultra vires, nor fraudulent nor dishon- est, failure on the part of the directors really to exer- cise their judgment as such and actual loss or damage to the company must be shown, ibid. If directors adopt a system of doing business which ignores a factor which by statute ought to be a part of that system (e./y., the obligation to keep company funds and trust funds distinct) that will constitute such negligence as will impose liability if loss is shown to have resulted: Re Dominion Trust Co. {Directors' Case) (1917) 32 D. L. R. 63. DIEECTOKS. 495 The liability of directors de facto is the same as Sees. 80-81. where they are regularly appointed: Coventry and ^^ jacto Dixon's Case (1880) 14 Ch. D. 660, at 670 and 673; i^e directors. Otven Sound Lumber Co. (1915) 34 0. L. R. 528; (1916-7) 38 0. L. E. 414; Macdonald v. Drake (1902) 16 Man. R. 220 (liability for wages) ; Northern Trust v. Butchart (1917) 35 D. L. R. 169. A director is not bound to take any definite part in Effect on the conduct of the company 's business : In re Brazilian, of^non^Lter- dc, Ltd. (No. 1) (1911) 1 Ch. 425, and a director who ventionin . comDunv .s takes no part therein wall escape liability : Re Dominion aftaivs. " Trust Co., Directors' Case (1917) 32 D. L. R. 63. So. far, however, as he does undertake it he must exercise, reasonable care : In re Brazilian, Sc, Ltd., supra. A director is not bound to attend any meeting of the board, but gross inattention to the business of the directors may amount to al)reach of trust. An ordinary director who only attends at the board occasionally cannot be expected to devote as mucli time and atten- tion to the books as the sole managing partner of an ordinary partnership: Re Forest of Dean Coal Mining Co. (1878) 10 Ch. D. 450. See also Marzetti's Case, 28 W. R. 541 ; Re Faure Accumulator Co. (1888) 40 Ch. D. 150; Sheffield S South Yorkshire, etc., Society v. Aizle- wood (1889) 44 Ch. 1). 412; In re National Bank of Wales (1899) W. N. 131, (1899) 2 Ch. 629; Marquis of Bute's Case (1892) 2 Ch. 100. Directors who were only present at a directors' inciting which confirmed the minutes of the meeting at wiiicli the impi'opor application of funds was resolved upon cannot be thereby held to concur in the improper upplication : hi re Lands Allotwcvf Co. (1894) 1 Ch. 610.- ^ Similarly where a director did not authorize or rlirect the payment out of the company's moneys in illegal commissions, except in one instance where he joined in signing a cheque **on account of commis- sion," he was held to be liable only for the amount of such checpu': Re Mouarch Bauk of Canada (1910) 22 O. L. R. 516. And see Crawford v. BafJiurst Land, rOr.. 49(5 DOMINION COMPANIES ACT. Sees. 80-81. Co. (1918) 42 0. L. II. 257; reversed (1920) 50 D. L. R. 457. Effort of resign.Ttiou. Ultra vires acts. W'Ir'ii a director resigns iiis office and his resigna- tion is accepted by tlie board, his responsibility for further acts of the board is at an end; so if his name were to ai)pear as one of the directors in reports issued by the board, he having taken no part in their prepara- tion or in advising the business with which they deal, he would not be liable for the statements contained in them, or, if the matters dealt with were the payment of a dividend, for the recommendation of the dividend, even though he knew his name appeared in the reports : In re National Bank of Wales (1899) W. N. 131 ; (1899) 2 Ch. 629. Directors who act in excess of their authority are in some cases held liable to those with whom they deal on an implied warranty of their authority: Firhanks v. Humphreys (1886) 18 Q. B. D. 54; Chapleo v. Bruns- wick, etc. (1881) 6 Q. B. D. 715. An action lies against an agent upon an implied warranty of authority in fact, but not upon an implied representation of authority in law, to do an act : Beattie v. Lord Ehiiry (1872') L. R. 7 Ch. 777. And a representation by a director, founded on a mistaken view of the extent of his authority in point of law, will not render him liable to the person to whom it was made: Struthers v. Mackenzie (1897) 28 0. R. 381. Thus, where a company or association was prohi- bited by the statute incorporating it from purchasing goods on credit, the directors who authorized the illegal purchase, but without any express warranty or repre- sentation of the authority of the association to buy on credit, were held not to be liable upon an implied repre- sentation or warranty: Struthers v. Mackenzie, supra. As to bills and notes, see Madden v. Cox (1880) 5 A. R. 473', Broivn v. Rowland (1885) 9 0. R. 48; 15 A. R. 750; Walmsley v. Rent Guarantee Co. (1881 ) 29 Gr. 484; Tliames Navigation Co., Limited v. Reid (1886) 13A. R. 303. DIRECTORS. 497 Where there has been some mis-application of the Sees. 80-81. funds of the company to purposes which are iiltra vires " of the company, this is regarded as a breach of trust for which the directors guilty of it mil be held person- ally liable : Stringers' Case (1869) L. R. 4 Ch. 475. Directors acting only partially ultra vires and in the true and reasonable belief that they are acting in the interests of the company, are not chargeable mth ^^ dolus niahis" or breach of trust merely because in jjromoting the interests of the company they are also promoting their own, or because they afterwards sell shares at prices which give them large profits : Hirsche V. Sims (1894) A. C. 654. The creditors of a limited company are entitled to have the capital of the company preserved for the pay- ment of their claims ; consequently the payment by the directors to the shareholders of the whole or any part Dividends, of the capital in the form of dividends or otherwise is ultra vires and a breach of trust, and the directors jointly and severally may be ordered to make good the amount of capital so paid; but, in case the repayment has been made with the sanction of the shareholders, witliout prejudice to their right to recover from each sJiareholder the amount of capital he has received : lie National Funds Assurance Co. [1878] 10 Ch. D. 118. See also Flitcroft's Case (1882) 21 C. D. 519; Re Sharpe [1892] 1 Ch. 154; London and General Bank (2) 11895] 2 Ch. 673; Postage Stamp, etc., Co. [1892] 3 Cli. 566; George Newman d Co. [1895] 1 Ch. 674. In sucli a case a director who has paid damages may seek contribution from liis co-directors wlio participate in the breach of trust: Re Anqlo-French Society (1882) 21 Cli. I). 501 ; Ramskill v. Edwards (1885) 31 Ch. D. 100. Roc Cliff licr, notes to s. 70. Directors may also be liabk' to outsiders for their Li.ibiiity ovvTi wrongs, e.g., fraud: Re Traders' Trust Co. £^^^°^^- Korii (1916) 26 D. L. R. 41 ; Parlrr v. McQuesten, 32 r. C R. 273; or broach of trust: Brenes & Co. v. Downie (1914) S. C. 97— Ct. of Sess. D.C.A. — Vy 9S> 4iiS DOMINION COMPANIES ACT. Sees. 80-81 Oriininal liability. Wages, Wrongful payment of dividends. Indemnity for actions. Penalties. Failure to use " Limited." The liability of directors to subscribers in an action I'or deceit or for compensation for mis-statements in the prospectus has been considered, supra, under s, 43. For criminal liability of directors see. Rex v. Hen- drie (190G) 11 O. L. R. 202, where it, was held that more than mere acquiescence was required to make them liable under ss. 197 and 198 of the Criminal Code; see also Rex v. Hmjs (1907) 14 0. L. R. 201. As to personal liability for wages, see s. 85, infra. For liability of directors on account of wrongful payment of dividends, see notes to ss. 70, 71 and 82 of the Act, and s. 123 of the Winding-up Act. As to indemnification of directors against costs in- curred in suits respecting the execution of their office, and generally, see s. 79, and notes. See notes to ss. 116 ff as to offences and penalties. Penalties are imposed by the following among other ctions for an infraction of their provisions: 43A 5 (prospectus issued without a copy being filed) ; 54E (penalty for concealing name of creditor on reduction of capital) ; 69G, 6'9H, 691, 69 J (penalties for non-com- pliance with provisions of s. 69) ; 92 (5), 93 (3) (inspec- tion) ; 94B (5) (issuing copy of balance sheet without complying with section); 106 (3) (annual returns). See sec. 33, supra; 1 ; s. 1 15, infra. A bill of exchange drawn by the plaintiffs upon the Burford Canning Company (Limited) was addressed to "The Burford Canning Co.," and accepted by the drawees by the signature, ''The Burford Canning Co., Ltd." This was a few days after the royal assent had been given to the Ontario Act, 60 Vict., c. 28, s. 22 of which provided that in the case of contracts by limited liability companies the word " limited " should be written or printed in full, a previous statute, 52 Vict., c. 26, s. 2, having made the directors liable for the amounts due upon such contracts where the word " limited " did not appear after the name of the com- panv where it first occurred in the contract. The writ of summons in this action (against the directors) was issued on the very day on which the royal assent was given to the Act, 61 Vict., c. 19, s. 4 of which suspended DIEECTORS. 499 the operation of the Act of the previous session. Held, Sees. 80-81. that the use of the abbreviation ''Ltd." was not a compliance with 52 Vict. c. 26, s. 2. Held also, that the address to the '' Burford Canning Co." in the draft was the first place in which the name of the company appeared in the contract, but that the fact of its having been so written there by the plaintiffs did not disentitle them to recover. Held also, that no stay was created by 61 Vict., 19, s. 4, of any action but one brought under 60 Vict., c. 28, s. 22 (1), and the cor- i-osponding section of the revision of 1897, so that, upon this view of the effect of 52 Vict., c. 26, s. 2, the plaintiffs were entitled to recover. If, however, the use of the contraction '' Ltd." was a compliance with the last mentioned section, the plaintiffs were still entitled to recover, because the contract was made some days after the passing of 60 Vict., c. 28, s. 22, wliich required the unabbreviated word '* limited "to be used; and the plaintiffs, upon the execution of the contract by the Burford Canning Company (Limited), became and remained entitled to look to the directors personally, and had a vested right of action, with which the ''stay " clause, s. 4 of 61 Vict., c. 19, could not interfere, there being nothing in it which required the court to hold it to be retrospective: Tloivell Lifho- firaphic Co. v. Bretliour (1899) 30 0. R. 204. 7. Remuneration. Prima facie directors of a company are not cntith'd KiR-Mto to rennineration in tiie absence of statutory authority: [|on"' rJutfon V. TTV.s^ Cork By. Co. (1883) 23 Cli.'l). 659, 672; Uoray v. Howe Sound (1915) 22 D. L. R. 855. P.ut where a person has accepter 1 ihr olVu'c of director of a company and lias acted as such, there may be iiifcn-('d an agrecinfiit lictwccii him and the com- pany, on his pari fhat he will serve the company <>n the <('i-ms as to qualification and otherwise contained in the ai'ticles of association, and on tlie pai't of the comi)any that he shall receive the remunei-atiou and benefits provided by the by-laws for the directors: Be Anfilo AKsfrian Co. (Isaac's Case) (1892) 2 Ch. 158. rcTiiunera- 500 DO.Mi.MON COMPANIES ACT. Sees. 80-81. Wlioro the by-laws provide for rcMimneration it is a matter of internal management: /liirlcnid v. Earle (UHILM A. C. 83, 101. The right to remuneration is limited by the pro- visions of the charter and by-laws. Thus by-law 17 of the Jl & I. Company provided that the managing director should be paid for his services such sums as the company " may from time to time determine at a general meeting." The only provision made at a general meeting was on 27th January, as follows: " The salary of the managing director was fixed until October 31st next, as at the rate of $4,000 per annum." L., the managing director, sought to recover for ser- vices rendered as such subsequent to October 31st. Held, that he could not do so: Be Bolt and Iron Co.; Livingstone's Case (1887) 14 0. R. 211 ; 16 A. R. 397. And where a director withdraws sums in excess of the authorized remuneration, he is gTiilty of a breach of trust, ibid. Unjustifiable Where the remuneration is not justifiable by ser- lemunera-^^ vices rendered or by the state of the company's busi- tion. ness, directors cannot vote the president a salary in order to permit him to acquire shares and gain control of the company: Giguere v. Colas (1915) Que. 48 S. C. 198. So also where there is no bona fide purpose of remuneration, but the intention on the part of the directors is to vote all the profits of the company to themselves for past service in capacities in which they had never been appointed, such action will not be ui)held: Gardner v. Canadian Manufacturing Co. Ltd (1900) 31 0. R. 488. See also Cook v. Binds (1918) 42 0. L. R. 273, judgment of Lennox, J. Gratuities— A Company may vote gratuities to the directors J^t!.^^a where this is done as incidental to the carrying on of the company's business: Tlutton v. West Cork By Co. (1883) 23 Ch. D. 654, 671-2; but not gifts to directors when the companv's capital is impaired: Cratvford v. Bathurst Land dec., Co. (1916) 37 0. L. R. 611, 638 and on appeal (1918) 42 0. L. R. 256, per Riddell and Rose, services. DIEECTOES. 501 J J. This case was reversed by the Supreme Court of Sees. 80-81. Canada, by a majority of three to two; (1920) 50 D. L. R. 457, but the judgments of the majority on this head went on the ground of personal disqualification of the plaintiff to bring the action and acquiescence. And it is submitted that the above qualification to the rule is settled by the decisions mentioned in the judgments in the above case. See also the judginent of Rose, J., in Cook V. Hinds (1918) 42 0. L. R. 273, 301. The Act does not deal with the question of grant- ing remuneration for past services, but this may be done, at any rate w^here all the shareholders agree : Bartram v. Birtwhistle (1908) 15 0. L. R. 634, where a grant by the shareholders at an annual meeting to the treasurer of the company for his services during the i)ast thirty years was upheld. This is a matter of internal economy, per Boyd, C, at p. 636. But a company can not expend its funds in payments to the directors for past services where the company has transferred its undertaking to another company and is being wound up: Hutton v. West Cork /?//. Co. (1883) 23 Ch. D. 654. See also Stroud v. Royal Aquarium (1903) 83 L. T. 243; Warren v. Lambeth Water Works (1904-5) 21 T. L. R. 685. So also where tlie articles of association authorized the payment, a bonus and salarv for services rendered voted at a meeting at which all the shareholders were present could not be recovered ])ack : MacdonaJd v. Godson (1916) 31 1). L. R. 363. See also Cook v. Hinds (1918) 42 O. L. R. 273 a case of remuneration for past services in which tho judgment, however, went on other grounds. In England if tlie articles autliorize it remuneration Romuncrfl- may be paid out of capital: Re Lnndy Craniie ^'<^- el[pita'j'^°^ (1872) 26 L. T. N. S. 673; and the same liolds good'" under tliis Act if the letters patent so specify; Re ruhlishers' Syndicate, Raton's Case (1903)5 0. L. R. 392, 406. There is no general presumption that the foes of directors are to be paid <>nt ot' jirofits only; Re Luvdy Granite Co., supra, and directors can sue 502 DOMINION COMPANIES ACT, Sees. 80-81. for tlic t'ccs to wliicli tlioy are entitled: Nell v. Atlanta Co. (1894) 11 T. L. B. 407. However, in Re Publish- ers' Simdicate, Paton's Case (1903) 5 0. L. R. at p. 40(,), Mac'laren, J. A., lays down the proposition that tile remuneration of directors can only be given out of the assets properly divisible among the shareholders themselves and not out of capital, citing hi re George Neivman (1895) 1 Ch. 674, which was, however, a case involving gifts to directors: see per Lindley, L.J., at p. 686. Moreover, in the Publishers' Syndicate Case it did not appear that any services had been rendered and the statutory requirement of a by-law authoriz- ing the remuneration had not been complied with. The case is accordingly not decisive on the question of the legality of the payment of remuneration out of capital where the company's by-laws authorize such payment. Probably such pajTiient wdll be upheld provided suffi- cient assets remain to pay all creditors' claims in full. The issuing by a company of paid up shares in its stock is a legitimate mode of paying a debt; cf. Gardner v. Iredale (1912) 1 Ch. 700; and in Beaudry V. Read (1907) 10 0. W. R. 622, Riddell, J., was appar- (^ntly of the opinion that the issuing of paid up shares to directors by way of remuneration was nnobjection- nble provided the requirements of the governing stat- ute were complied with (which had not been done in that case.) By issuing paid-up shares. Waiver and forfeiture. Directors can by resolution postpone their right to remuneration not yet due : In re London & Northern Bank (1901) 1 Ch. 728; but see In re Central de Kaap Gold Mines (1899) 69 L. J. Ch. 18; W. N. 216, 235. Directors are entitled to '' remuneration for their ser- vices," or " remuneration as directors," notwith- standing that they may also be receiving remuneration as receivers and managers in a debenture holders' pro- ceeding, In re South Western of Venezuela By. (1902) 1 Ch. 701. See also Victoria Mutual Fire Insurance Co. V. Thompson (1882) 32 L\ C. C. P. 476. Nor is a director's remuneration affected because his duties have diminished: In re Consolidated Nickel Mines DIRECTORS. 503 (1914) 1 Cli. 883 ; nor because there lias been a shifting Sees. 80-81. of duties, if it is clear that there was an intention that^ his remuneration should nevertheless continue: Bur- land V. Earle (1902) A. C. 83, 101. The rule applicable as regards forfeiture of the Misconduct, right to remuneration in the event of misconduct is, that where the duties are severable the agent, employee or director is entitled to remuneration in all cases where he has been honest, but is not entitled to it in all the instances where he has been dishonest : Nitedals Taendstikfahrik v. Bruster (1906) 2 Ch. 671; but where the duties are inseparable unfaithfulness even without fraud in the performance of any one of them will disentitle him to all remuneration. And in Cook V. Hinds (1918) 42 0. L. R. 273, it was held that the duties of directors, who were also managers and general superintendents of the company's business, were not severable so as to entitle them to remuner- ation in respect of their services as managers and superintendents, where they had been guilty of divert- ing business from the company, but this holding may perhaps depend on the peculiar facts of that case. But misconduct on the part of an employee who is also a director does not disentitle him to salary pre- viously earned: Canada Bonded Attorney and Legal Directory v. Leonard-Parmiter, Ltd. (1918) 42 0. L. R. 141; 42 D. L. R. 342. Section 80 enables the directors to pass by-laws Necessity as to tlie renmneration of the directors (sub-sec. Q.,)^o^^^y-^^^- and as to the remuneration of the agents, officers and servants of the company (sub-sec. d.). The former require confirmation in the absence of which they only have force until the next nnnual meeting; the latter do not, section 81. Where the act requires a by-law a resolution will not suffice; Gardner v. Canadian Mffi. Co. Ltd. (1900) 31 O. R. 488, 493; Re Ontario Express (1898) 25 0. R. 587; Birney v. Toronto Milk Co. (1903) 5 0. L. R. 1; Bartlett v. Bartleft Mines (1911 ) 24 O. L. R. 419. The power to pass the by-law being given to the directors 504 DOMINION COMPANIES ACT. Sees. 80-81. the sliaroliolders a re tleprivetl ol' the rig-lit of doing so : Beaudry v. Read (1907) 10 0. W. R. 022, G25; Mackvn- zie V. Maple Mountain cCc, Co. (1909) 20 0. L. R. 170, 172, 173. Accordingly directors are not entitled to renmneration in tlie absence of a by-law. See cases in (1!H)1) 32 0. R. 60, where a manager of a mining company, and Byau v. IT/V/.s' (IDH)) 4,'> (). L. II. 624 (App. Div.), where a motion picture actress M'as held not to be within the Ontario section. The following are cases decided under the section : Labourer. This includes a person actually performing manual Vv'^ork at a daily wage, although he is also entrusted with the supervision of other workmen, and to that extent is a boss or foreman: Fee. v. Turner (1904) Que. 13 K. B. 435 ; also a miner paid at the rate of so much a car, but otherwise working as a daily labourer, being under the direction of a pit-boss : Cyreic v. Dallas (1908-9) 9 W. L. R. 598. Clerk. The term " clerk " includes a book-keeper working under instruction from a general manager, but not an auditor working under a contract, much, if not all, of whose work could be done by his employers: Yellotv- head Pass, etc. Co. (1917) 2 W. W. R. 295. The cases under section 70 of the Winding-up Act, infra, are also in point as to the meaning of the term clerk. These are collected in Re Parkin Elevator Co., Ltd., Dunsmoor's Claim (1916) 37 0. L. R. 277, at pages 287 to 290. Servant. This has been held to include a mine superintendent with a restricted authority, and a mine physician, who looked solely to his remuneration from the company for his livelihood and was under the obligation to attend anyone connected with the company when occa- sion arose: Yellowhead Pass, etc. Co. (1917) 2 W. W. R. 295. See also as to the meaning of labourers, servants, and apprentices the follomng cases : Riley v. Warden (1848) 2 Ex. 59; Sleeman v. Barrett (1864) 2 H. & C. 934; Hunt v. Great Northern Ry. Co. [1891] 1 Q. B. 601; Noivlan v. Ahlett (1835) 2" C. M. & R. 54; Nicoll V. Greaves, 33 L. J. C. P. 259; Laivlor v. Linden (1876) Ir. R. 10 C. L. 188. DIKECTORS. ' 509 The assignee, legal or equitable, of a wage claim Sect. 85. can sue under the section: Lee v. Friedman (1910) 20 Assignee of 0. L. I^ 49. ^i^""- The plaintiif' s claim must be for wages. Expend- claim must ing money for the company at its request in payment wages. of wages and other services does not create a debt for wages within the section: Herman v. Wilson (1901 ) 32 0. R. 60. See also George v. Strong (1909-10) 1 0. W. N. 350. An allowance for travelling expenses is within the Ti-aveiiing section: PukidsU v. Jardme (1912) 26 0. L. R. 323 ; ^^p^^«^«- 5 D. L. R. 212, a decision of the Divisional Court. In Darrah v. Wright (1915) 7 0. W. N. 233, Len- nox, J., disallowed travelling expenses. More or less complicated arrangements are some- illustrations. time made by companies with their employees and boarding-house keepers and store-keepers, under which it may be difficult to say whether the latter are entitled to sue as assignees of wage claims, or whetlier the amounts claimed are due not as wages but under the plaintiff's contract with the company. The plaintiff, a store-keeper, supplied goods to the company's employees, which by verbal arrangement with the company were to be paid for out of their Wciges. Tlie i)hiintiff at the end of each month was to, and did, give tlu; company particulars of his account against tlie men, and the company was to hold back tiic amount of tlie account for the plaintiff out of the men's wages. Tlie plaintiff did not discharge the linl)ility of the men until the money had been actually paid by the company. It was held lliat this was a good equitable assignment of the wages, and the com- pany having ])aid neither the i)laintiff nor tlie wage- eanici-s, the i)laintiff as assi,a:nec was held entitled to recover the amount of his claim against the directors: Lee V. Friedman (1910) 20 O. T,. R. 49. On the other liand, whore there was an arrangement between a boarding-house keeper and the company whereby th(^ former charged for meals served to the company's em- ployees, the company deducting the amount owing for 510 noAIlNIOX COM TAN IKS ACT. Sect. 85. meals from the employees' pay chcMiues and ])ayiiiii: ~ ~' it to the boarding-house keeper, it was held that such amount never became due to the employees at all as wag-es, but was due to the plaintiiT under his contract with the company, and that therefore tlie plaintiff could not claim as an equitable assignee of the wages: Olson V. Machin (1912) 8 D. L. R. 188; 4 0. W. N. 287 It was further held in the same case that an action being brought on a note given in part settlement of un account stated made up partly of wages and partly of goods supplied without apportionment as between w^ages and the other claims, the character of the claim was changed. Under an arrangement between the plaintiff, a store-keeper, and the company, employees of the com- pany w^ere entitled to have their purchases charged against their wages. The purchasers were required to initial the vouchers, which were sent to the com- pany; and when pay cheques were drawn, a separate cheque was made out for the amount of each w^ork- man's store-bill, payable to the workman. These were endorsed by the men and kept by the company, w^hich made an adjustment monthly with the plaintiff, giving him credit for the amounts of the cheques and any goods sold to the company, debiting him with amounts due by him to the company, and giving him a cheque for the net balance. It was held in respect of a claim by the plaintiff based on cheques for balances due him that the money became payable to him by virtue of his direct contract with the company, when an adjustment took place and he accepted a cheque. There was then a novation, the plaintiff became a creditor in respect of the cheques given him, and the demands ceased to be demands for wages : Covenry v. Glcnden- ning (1915) 33 O. L. R. 571; 22 D. L. R. 461. Enforcement The jud.gmcut against the company being res inter of liability. ^^^^^ ^^f.^ jg j^^l couclusive agaiust the directors, who may set up such defences as, e.g., that the plaintiff is not a clerk, labourer, etc., Guenard v. Coe (1914) 17 DEBECTOES. 511 D. L. R. 47; 7 A. L. E. 245; Darrah v. Wright (1915) Sect. 85. 7 0. W. N. 233. But a mere irregularity in the judg- ment against the company cannot be attacked by the directors in absence of fraud: Lee v. Friedman (1910) 20 0. L. R. 49. Since the liability of the directors is several as well as joint, the plaintiff is entitled to sue the dirc^c- tors separately as well as jointly, and is not bound to join them all as defendants : Reuckivald v. Murphy (1914) 28 D. L. R. 474; 32 0. L. R. 133. Where a number of plaintiffs were suing in one several action against the directors, they were required to I'l'^i^ti'^s- elect whether one of them, and if so which w^ould proceed with the action: Herbert v. Evans (1909) 13 0. W. N. 632, 682. The plaintiff will not be prejudiced by the fact that other in his suit against the company he has included a claim claims, on a note as well as one for wages : Williams v. Graham (1916) 34 W. L. R. 855. It is sufficient compliance with this section that the Exccmtiou execution is placed in the hands of the sheriff of the "^satisfied. county in whicli the Head Office of the company is situated: Puknlsld v. Jardine (1912) 26 0. L. R. 323; 5 D. L. R. 242. It is enough to satisfy the statute that a fair and hona fide attempt has been made to col- lect the amount of the judgment from the company, and that a hoyia fide return has been made that there are no assets of the company to satisfy it : Price v. Munro (1885-6) 12 A. R. 453, at p. 464, 468. A creditor cannot issue execution against a coin- iofl-e<'tof l)nii\- in 1i(|uidation without leave, and if he does so the winding-up. execulioii is a iiullitv: Pilote v. Leclerc (1917) 52 Que. S. C. 127. In tlu' event of a winding-np supervening a plaintiff shonhl a|)i)ly foi- h'ave to sue tlie company and issue execution as a preliminary step to suing the directors: Re Lake Wi^rviperj Transportation Co., Paulson's Claim (1891) 7 Man. R. 602. If tlie execution is all! DOMINION' COINIPANIKS A("r. Sect. 85. alreaily in tlio slicrilTs liniids, s. '22 of the Wiiiding- up Act (.Iocs not pi'cvent the making of a retnrn of nulla bona after the winding-up order: Pukidski v, Jardinc (1912) 26 0. L. R. 323; 5 D. L. R. 242. A workman is not entitled to his remedy against the directors under the section when, having obtained judgment before the winding-up, he neglects to execute it before the company goes into liquidation and fails to get leave to issue execution afterwards: Pilofe v. Leclerc (1917) 52 Que S. C. 127. On the other hand the Quebec Superior Court recently held in Dallaire v. Leclerc (1918) 52 Que. S. C. 201, that the plaintiff need not show a return of nulla bona if the company's inability to satisfy the claim appeared from the fact that it had gone into liquidation and that there had been a sale by the liquidator. It was further held that a delay of nine days by the plaintiff was not negligence on his part, which the directors could set up as suffi- cient ground for a non-suit unless they were prejudiced thereby. It was held that the winding-up did not put an end to the directors' powers, but only suspended their exercise, so that the directors did not cease to be such on the occurrence of the liquida- tion. De facto Be facto directors are liable under the section: directors. j^j^^^j^nald V. Drake (1906) 16 Man. R. 220. Liability of 86. Every director of any company who expressly or im- flirfctors for pliedly authorizes the commencement of operations by the com- !"om™fenre- V^^J 0^' ^^^ incurring of any liabilities by the company before rnent of ten per centum of its authorized capital has been subscribed and bu.siness. pgj(.| f^j.^ g^^^ii j^g Jointly and severally liable with the company for the payment of any such liabilities so incurred. 2 E. VIT., c. 15, s. 18. Cf. section 26, and see Muldoiuan v. German Canadian Land Co. (1909) 19 Man. L. R. 667, 674; French Gas Saving Co. v. Desbarats (1912), 1 D. L. R. 136. MEETINGS. 513 Meetings. Sees. 87-88. 87. Shareholders who hold one-fourth part in value of the gpeciai subscribed stock of the company may at any time by written meeting, requisition and notice call a special meeting of the company, for the transaction of any business specified therein. 2 E. VII., c. 15, s. 72. 88. In the absence of other provisions in that behalf in the Provisions letters patent or by-laws of the company, — ''is to. (a) notice of the time and place for holding a general meet- Notice, ing of the company shall be given at least fourteen days previously to the time in such notice specified for such meeting, in some newspaper published in the place wliere the head office or chief place of business of the company is situate, or if there is no such newspaper, then in tlie place nearest thereto in which a newspaper is published ; (b) at all general meetings of the company, every share- votes, holder shall be entitled to give one vote for each share then held by him ; and such votes may be given in person or by proxy, if such proxy is himself a shareholder : Provided Pi'oxies. that no shareholder shall be entitled either in person or by q.^u^ ^^ ^^ proxy, to vote at any meeting unless he has paid all the paid, calls then payable upon all the shares held by hi-m; (c) all questions proposed for the consideration of the share- Majority holders at such meetings shall be determined by the vote, majority of votes, and the chairman presiding at such meetings shall have the casting vote in case of an equality Casting vote, of votes. 2 E. VII., c. 15, s. 73. Special Meeting. Notice. Meetings. Notice of meetings. By whom given. How given. Right of discussion. Minority rights. Decisions. Chairman. Votes. Proxy. Poll." Quorum. r)14 DOIMIXION COMPANIES ACT. Sees. 87-88. Special Meeting. The yliarelioldcrs of one-fourtli i)art in valuo of the siibscribod capital were held competent nnder the Do- minion Companies Act to convene a special meeting for the election of directors, where no annual general meeting had been held, or where, if held, no election had taken place: Austw Mining Co. v. Gemmell (1886) 10 0. R. 703; and see Sovereen v. Whiteside (1906) 1^ 0. L. R. 638. The one-fourtli part in value is reckoned on the par value subscribed, not the amount paid : Purdom v. On- tario Loan, dc, Co. (1892) 22 0. R. 597. The right of a bearer of a share warrant to sign a requisition for a special meeting will depend on the regulations of the company respecting share warrants (s. 68 A 4) and whether he is deemed to be a share- holder thereunder. Joint holders of shares must all sign, unless the by-laws otherwise provide: Patent Wood Keg Syndicate v. Pearse (1906) W. N. 164. Where the directors, or failing them the sharehold- ers, have powder to call a general meeting the Court will not interfere to compel the directors to summon a meeting: Macdougall v. Gardiner (1875) L. R. 10 Ch. App. 606. Notice. As the section is silent as to the contents of the notice presumably the general rule applies that where there are no special provisions the notice 'Should state the date, time and place of the meeting and the nature of the business to be considered; cf. Reg. v. Hill (1825) 4 B. & C. 426. See also on contents of notice Pacific Coast Mines v. Arhuthnot (1917) 36 D. L. R. 564; (1917) A. C. 607. Meetings. MeetingB The members of a company in a general meeting generally assembled constitute a forum supreme in all that re- lates to the internal arrangement provided they keep within the corporate powers and act in subordination MEETINGS. 515 to the immutable statutes, if any, which form its con- Sees. 87-88. stitution : Mayor of Colchester v. Louten (1813) 1 V. & B. 226. The company can only transact its business and manifest its wishes by and through the individuals composing it. This is done at the meetings of the com- pany, general or special, and it is, therefore, necessary that the legal requisites for the validity of such meet- ings should be strictly observed. The individual consents of the shareholders given separately are not equivalent to a resolution passed at a meeting: Be George Newman & Co. (1895) 1 Ch. 674, at p. 686, except where authorized by statute, e.g., s. 48, which provides that a by-law creating preference shares may be unanimously sanctioned in writing by all the shareholders. Where, however, all the persons beneficially interested in the company's capital have concurred the company or its liquidator may be bound by a transaction notwithstanding the absence of a shareholders' meeting: A. G. of Canada v. Standard Trust (1911) A. C. 498. Meetings are of two kinds, ordinary or general and extraordinary or special. The former are held periodi- cally at appointed times and for the consideration of matters in general ; the latter are called upon emer- gencies and for the transaction of special business: Austin Minipg Co. v. Gemmell (1886) 16 0. R. 706. The provisions as to the annual meeting of a com- pany are set out in s. 105. Tf the directors for the ensuing year are proposed to be elected at the annual meeting in accordance with the usual practice the meet- iiiC' is ref|uii-('(l lo bo held at some place within Oan- •ida, s. 77. Notice of Meetings. Kvci-y siiareholder has a I'iglit to be present at a xoriceof meeting and to be notified that a meeting will take "^^^^^ings. |»l;ice, and tlic omission to give notieo to any share- holder, even though the omission hi' accidental, will invalidate the proceedings of the mooting: /?. v. Lang- 51G DOMINION COMPANIES ACT. Sees. 87-88. /'(>n/c (1S3G) 4 A. -iven proxies at dates prior to the agreement sought to be ratified. In the absence of provisions as to the length of notice (such as appears, e.g., in s. 88 (a)) reasonable notice is necessary, and two days' notice has been held reasonable. Where directors of a company are proceeding to call a meeting at an early date to prevent some of the shareholders from exercising their voting power, they will be restrained by the Court: Cannon v. Trask (1875) L. R. 20 Eq. 669. By whom given. By whom given. Section 80 (e) enables the directors to pass by-laws as to the calling of meetings "regular and special" of the company ; and such by-laws generally provide that meetings shall be summoned by the directors. The summoning of meetings should be authorized by re- solution of the board ; the consent of a quorum of direc- tors as individuals will not suffice : In re Haycraft Gold Bednction Co. (1900) 2 Ch. 230, but the directors as a board may before the meeting ratify an unauthorized notice sent out by an official of the company and pur- porting to have been given under their authority: Hooper v. Kerr Stuart (1900) 83 L. T. 729. Resolu- tions passed at a meeting summoned by a board of de facto directors are not invalid: Boschoeh, &c., Co. v. Fulie (1906) 1 Ch. 148. As to notices given by un- authorized persons, see In re Haycraft Gold Reduc- tion Co. (1900) 2 Ch. 230; Be State of Wyoming Syndi- cate (1901) 2 Ch. 431; Courcliene v. Viger Park Co. (1915) 23 D. L. R. 693; 24 Que. K. B. 97. The correct procedure is for the notice to state that it is given "by order of the board." The company may take advan- MEETINGS. 519 tage of an irreg'ularity as against its secretary-trea- Sees. 87-88. urer: Courcliene \. Tiger Parlx, supra. ~ How g-iven. In the absence of special provision in the letters How given, patent or by-laws notice of a general meeting must be given by advertisement published in compliance with s. 88 (a). ''At least fourteen days" in this section means fourteen clear days : Beg. v. Justices of Shrop- shire, 8 Ad. & E. 173; cf. also In re Raihvag Sleepers, &c. Co. (1885) 29 Ch. D. 204.. The directors are authorized by s. 80 (e) to pass by-laws as to the calling of meetings and the words ''in the absence of other provisions in that behalf in the . . . by-laws for the company," appearing in s. 88 by implication permit tlie by-laws to provide that notice may be given othermse than by advertisement. The common form of by-law governing the giving of no- tice of meeting provides for the mailing of notices to the shareholders. Qucere, whether in view of s. 97 a notice mailed in an unregistered letter is validly served. A notice served by post is to be deemed to have been served when the letter containing it would be delivered in the ordinary course of post, s. 98. Ac- cordingly, when notice is given by post it is necessary to allow a sufficient margin of time for the delivery of the letter in computing the interval between the date of service and the date of the meeting. Right of discussion. As to the right of a shareholder to speak at a meet- ui-iitof ing, see Wall v. London & Northern Assets Corpora- '''-^^'"ssion. tion (1898) 14 T. L. H. 496; 2 Ch. 469. A speech by a sliareliolder at a meeting of the com- pany defamatory of the directors is privileged whore it is in reference to matters wliicli affect the comi);niy's interests: Parsons v. Surgey (1864) 4 F. & F. 247. And a circular signed by a shareholder to the otlicr sharfliolders of the company is also privileged though it contains libellous matter: Quartz Hill Gold Mining 5*20 DOMINION COMPANIES ACT. Sees. 87-88. Co. v. Beall (1882) 30 W. R. 583. See also Lawless v. Anglo -Egyptian Cotton and Oil Go. (1869) L, R. 4 Q. B. 2{V2- Liverpool Eousclinld Stores v. Smith (1887) 37 Ch. D. 170; Pittard v. Oliver (1891) 39 W. R. 311. And see Harper v. Hamilton Retail Grocers' Associa- tion (1900) 32 0. R. 295. A report to a newspaper of the proceedings of a general meeting is not, lioAvever, privileged: Davison V. Duncan (1857) 7 E. & B. 229. And see generally, Owen Sound Building and Sav- ings Society v. Meir (1893) 24 0. R. 109; Toronto Brewing and Malting Go. v. Blahe (1882) 2 0. R. 175; Austin Mining Go. v. Gemmell (1886) 10 0. R. 696; Christopher v. Noxon (1886) 4 0. R. 672. Minority rights. Minority At any meeting the majority, in the absence of ex- nghts. pr^ss provision to the contrary, will bind {\\q minority : ' Re Horbury Bridge Goal Co. "(1879) 11 Ch. D. 109. It is sometimes said that the majority is the company, but this is not accurate. As to the rights of minorities the following rules liave been formulated by Buckley (Companies Acts, 9th ed., pp. 612-14) :— Rules as to. '^1. If an act, not ultra vires the corporation, and which therefore might be done with the approval of a majority, be done irregularly and without such ap- proval, then the majority are the only persons who can complain, and the Court will not entertain the com- plaint except at the instance of the majority, and in a proceeding in which the corporation is plaintiff. 2. In any proceeding brouglit to redress a wrong done to the corporation, or to recover property of the corporation, or to enforce rights of the corporation, tlie corporation is the only jjroper plaintiff. Except that if (see rule 3, infra) an individual cor- porator sues the corporation to prevent it from doing sometliing idtra vires, e.g., to restrain it from carrying out an agreement with a third party, and joins that third party as a defendant, then as a necessary inci- MINORITY RIGHTS. 521 dent to the first "part of the relief claimed, the Court Sees. 87-88. will g'o on to direct the repa^Tnent of money, or restora- tion of property paid or disposed of under the agree- ment. 3. A single shareholder suing on behalf of himself and others, or suing alone and not on behalf, may make the company a defendant, and may restrain the com- pany and directors from doing an act which is illegal or criminal, or ulfi-a vires the corporation, and which a majority are consequently unable to affirm. A stranger who is not specially damaged cannot sue, and neither, semhle, can a shareholder, w^ho has with knowledge received and retains part of the proceeds of the ultra vires acts. If, how^ever, a majority are opposed to the illegal act, qticere whether the company should not be made or at any rate joined as plaintiff. 4. If the act complained of be not ultra vires, but be a wrong done to the corporation, of which there- fore the corporation alone, upon the principles already stated, can complain, yet if the alleged wrongdoers be themselves the majority, or turn the scale of the ma- jority, then the minority may sue by one shareholder on behalf of himself and others. 5. The above are general rules strictly adhered to, but not inflexil)le, and any case where the claims of justice require that an action in which the company is not plaintiff should be entertained, may be made an exception. But if the case is one in which the company ought to sue, then (subject to rule 6) the shareholder must exhaust all reasonable means of obtaining the in- stitution of an action by the company before suing him- self. But if the case be one of class (4), it is idle to say that a meeting ought to be called in which the alleged wrongdoers should not vote, for that would be trying tlie fpiostion of fraud as a preliminary step for ascer- taining the frame of the action in which it is to be tried. 6. 11" the case be one in wiiicli llic coinpauy ou.u'Jil to be ])l.'iintiff, the fact that the seal is in llic possession of ')-- 1H)MIMU.N COMi'AMES ACT. Sees. 87-88. llio adverse party will uoi necessarily preclude the in- ^^7 777 tending" plaintiffs from usini>' the con\])any's name, risrhts. ' Neither will it be necessary to obtain the resolution of n i»;enernl meeting" in favor of the action before the writ is issued. In many cases the delay might amount to a denial of justice. In a case of urgency, the intend- ing, plaintiffs may use the company's name, but at their peril, and subject to their being able to show that they have the support of the majority. In an action so constituted, the Court may give interlocutory relief, taking care- that a meeting be called at the earliest possible date to determine whether the action really has the support of the majority or not. If it ap- pears that the company's name has been used im- properly, it will be struck out,^and either the solicitor who used it or the person who in fact instructed the solicitor, will be ordered to pay the company's costs as between solicitor and client and the defendant's costs as between party and party. 7. A single shareholder may sue the company to enforce any individual right of his own, e.g., his right to have his vote recorded, or his right as a director to restrain his co-directors from excluding him from the board." Decisions. Decisions. A majority cannot divert corporate funds to pur- poses other than those for which they were advanced : Bagshaw v. Eastern Union R. Co. (1849) 7 Hare 114; nor validate an iiUra vires contract: Ernest v. Nichols (1851) 6H. L. C. 401. In all matters of purely internal management the majority is supreme: Foss v. Harbottle (1843) 2 Hare 461; so long as the majority act with bona fides and due consideration for the opinions of dissentients: Foss V. Harbottle (1843) 2 Hare 461. See also Bur- land V. Earle (1902) A. C. 83; Broivn v. Menzies Bay Timber Co. (1917) 34 D. L. R. ^^2; Johnston v. Thomp- son (1914) 15 D. L. R. 54:6; Ross v. B. C. Refining Co., MIlSrOKITY RIGHTS. 523 16 B. C. E. 227; Wheeler v. Freame (1914) 7 W. W. R. Sees. 87-88. 191. This rule means that if the act done, tlioiigh it be the act of the directors only, be one which a general meeting of the company could sanction, a bill by some of the shareholders, on behalf of themselves and others, to impeach that act cannot be sustained be- cause a general meeting of the company might imme- diately confirm and give validation to the act which the bill instances : Bagshaw v. Eastern Union R. Co. (1849) 7 Hare 114; Purdom v. Ontario Loan Go. (1892) 22 O. R. 597. The majority may modify the nature of the business carried on as long as they do not engage in anything ultra vires-. Attorney -General v. Gould (1860) 28 Beav. 485; Grant v. United Kingdom Stvitchhack R. Co. (1888) 40 Ch. D. 135. " . When quarrels arise and the governing body are so divided that they cannot act together, the Court will interfere: Featherstone v. Cooke (1873) L. R. 16 Eq. 298. The minority may invoke the aid of the Court wlien they suifer a special detriment by the directors taking the profits or using the assets for their own ends: Hodfikinson v. National Live Stock Ins. Co. (1859) 4 De G. & J. 422; Hichens v.-Congreve (1828) 4 Russ. 562. So where a fraud has been committed on a cor]iora- tioii ])y the majority: Ativood v. Merryiveather (1868) L. R. 5 Eq. 464; lieath v. Erie R. Co., 8 Blatch. 347. Or, where there is improper, inequitable, or harsh con- duct towards the minority: Waddrll v. Ontario Can- ning Co. (1889) 18 0. R. 41 ; Re London S Merc. Dis- count Co. (1865) L. R. 1 Eq. 277; Eraser v. WhaJJeg (1864) 2 11. &M. 10. They may also ask relief wiiere meetings have not been hold at convenient times: Cannon v. Trnsk (1875) L. R. 20 Eq. 669. And they are entitled to a lair liear- intr at the meetings of the company: Const, v. Harris, Tmii k R. 496. r)ll4 DDMIMON COMPANIES ACT. Sees. 87-88. A loa(liiit>- Eiig'lish case is tluit of Mcnier v. Hooper's ' Teh'i/raph Worls (1874) L. R. 9 Ch. 350. Tlioro tlie majority of the shares were owned by another com- ^rinol•ity panv, and ]\rollish, L.J., said that the majority conhl ridits. j-^Q^ \)Q allowed to sell the assets of the company and keep tlie consideration, bnt mnst allow the minority to have their share of any consideration that might come Decisions, to them. And the majority, i.e., the rival company, will be restrained from controlling the management of the corporation so as to advance their own profits by lessening those of the other company: Memphis S Charleston R. Co. v. Woods, 16 Am. St. 81. The majority will also be restrained from paying dividends on common stock in derogation of the rights of preference stockliolders : Henry v. Great Northern R. Co. (1857) 4 K. «& J. 1 ; Bannatyne v. Direct Spanish Teleqraph Co. (1887) 34 Ch. D. 287; Sturge v. East- ern Union R. Co. (1855) 7 D. M. & G. 158. And similarly when special rights are given to ordinary shareholders as to division or appropriation of profits : Faivcett v. Laurie (1860) 1 Dr. & Sm. 192; -bnt see Johnston v. Consum,ers' Gas Co. (1895) 27 0. R. 9. And the majority cannot agree to levy calls otherwise than on every shareholder alike : Preston v. Grand Collier Dock Co. (1840) 11 Sim. 326. Where a municipal corporation passed a by-law to raise money for a specific purpose they were restrained at the suit of a taxpayer for diverting the money to another purpose: Brogdin v. Bank of Upper Canada (1867) 13 Gr. 544; Grier^. Plunlett (1868) 15 Gr. 152. A shareholder cannot maintain an action on behalf of himself and all other shareholders to recover pro- perty, whether from the directors or officers, or any other person: Gray v. Lewis (1873) L. R. 8 Ch. 1050; Mozley v. Alston (1847) 1 Ph. 790; Foss v. Harhottle (1843) 2 Hare 461. But one or more shareholders may sue in their own name in the class of cases referred to above. The majority may determine whether the charter shall be surrendered. But see Ward v. Society of Attorneys (1844) 1 Coll. 370. MINORITY RIGHTS. 525 A majority may also ajoply for an Act of Parlia- Sees. 87-88. ment to change or modify the nature of the company, but the use of the company's money for this purpose may be restrained. See Ward v. Society of Attorneys, supra; Ware v. Grand Junction Waterivorks Co. (1831) 2 R. & M. 470; Steele v. N. Metropolitan R. Co. (1867) L. R. 2 Ch. 237; Telford v. Metrop. Board of Works (1872) L. R. 13 Eq. 574; Munt v. The Shreivs- hury & Chester R. Co. (1850) 13 Beav. 1; Simpson v. Denison (1852) 10 Hare 51. While a director is precluded from entering into Decisions, engagements in which he has a personal interest con- flicting with that of the company, a contract so entered into may be adopted by the company, provided that its adoption is not brought about by unfair or improper means, and is not illegal or fraudulent, or oppressive, towards those shareholders who oppose it: North-West Transportation Co. v. Beafty (1887) 12 App. Cas. 589, and in such a case a director has a perfect right to acquire sufficient shares to give him a majority, and to exercise his voting power in such a manner as to secure election of directors who will support the trans- action and ratify the proceeding at a shareholders' meeting. Ibid, and see Christopher v. Noxon (1884) 4 0. R. 672. P>ut where directors had made a misapplication of the funds to their own purposes, it was held that they could not subsequently validate it by a directors' by-law, ratified at a shareholders' meeting, at which they controlled the majority of votes : Waddell v. On- ■ tario Canniny Co. (1889) 18 0. R. 41. And in this case the circumstances were considered ample by Robertson, J., to bring it within the rule as to harsh treatment. And see Purdom v. Ontario Loan Co. (1892) 22 O. R. 597, for a discussion of the general rule that the Court does not interfere with the doing of an act by a company which should have been sanctioned by a ma- jority of the shareholders before the act was done, if 5'JG DOMINION (.'OMI'ANIES ACT. Sees. 87-88. isiu'li saiictioii can be at'tcrwards obtained. See also Re Bolt (('• Iron Co. (lcS87). 14 O. li. 211. It shonld also be remembered that a mercantile company in the absence of express power cannot trans- fer the whole of its business and assets, so as to render itself incapable in future of performing any of its corporate functions, without the consent of every shareholder, and an injunction will be granted on the application of a shareholder to restrain such a pro- posed sale: Beaston v. Farmer's Bank (decision of Story, J.), 12 Peters 102; Era Life and Fire Ins. Co. (1863) 1 DeG. J. & S. 29, 2 J. & H. 404, 1 H. & M. 672; Bird V. Bird's Patent, etc., Co. (1874) L. E. 9 Ch. 358. But the transfer may in such a case practically be made effectual by means of a winding-up. See further on this point notes to 32, supra. As to actions by shareholders see also notes to s. 99. Chairman. caiairman. The duty of the chairman is to keep order and see that the business is properly conducted: Indian Zoe- doneCo. (1884) 26 Ch. D. 70." He has prima facie authority to decide all inciden- tal questions which arise at such meeting, and neces- sarily require decision at the time, and the entry by him in the minute hook of the record of a poll and of his decision on all such questions although not con- clusive is prima facie correct. Ibid. The chairman should see that the meeting is promptly called to order, but see Armstrong v. McGib- hon (1906) Q. R. 15 K. B. 345. While the chairman may adjourn with the consent of the meeting, etc., he may, in his discretion, refuse to adjourn the meeting: Salisbury Gold Mining Co. v. Uathorn [1897] A. C. 268. If the chairman wrongfully adjourns the meeting, the shareholders may select a new chairman and pro- ceed with the business of the meeting: National Divel- lings Society v. Syhes [1894] 3 Ch. 159. But if a meet- ing is properly adjourned members who remain MEETINGS CHAIEMAX. 527 behind cannot validly proceed with the business of the Sees. 87-88. meeting: R. v. Gaborian (1809) 11 East 77. Official notice need not be given of a regularly ad- journed meeting: Wills v. Murray (1850) 4 Ex. 8-13; Scadding v. Lorant (1851) 3 H. L. C. 418. The business which may come before the adjourned meeting is "limited to the business which could have come before the original meeting: Christopher v. Noxon (1884) 4 0. R. 672 As to the conclusiveness of the chairman's declara- tion of the result of a vote see In re Hadleigh Castle Gold Mines (1900) 2 Ch. 419; Arnot v. United African Lands, Ltd. (1901) 1 Ch. 518; Caratel (New) Mines, Ltd. (1902) 2 Ch. 498. Votes. Unless there is some provision to the contrary to be found in the charter or other instruments by which the comi)any is incorporated, the resolution of the majority of the shareholders duly convened on any question with which the company is legally competent to deal is binding upon the minority, and consequently upon the company: North-West Transportation Co. v. Beatty (1887) 12 App. Cas. 589. But there are cases such as the alienation of corporate property where the dissent of one shareholder mav frustrate the wishes of the majority: Wilson v. Miers (1861) 10 C. B. N. S. 348. But a majority of the members will not be allowed by vote to commit a fraud on the minority : Menier v. Telegraph Co. (1874) L. R. 9 Ch. 350. Tlif register is the only evidence by wliich the right of Tiiciiiix'rs to vote at a general meeting can be ascer.- taincd. The question of beneficial ownership cannot bo filtered into: Pender v. Liishinqton (1877) 6 Cli. 1). 70. An action lies to compol the directors to record a vote whero the shareholder is iTn])r()pf'i-ly deprived of bis right. Ibid. iris DOMINION COMPANIES ACT. Votes. Sees. 87-88. Tliero is iiolliiug to prevent a shareliolder from — transfei'riiig some of his shares to nominees to increiise his voting power: Be Stranton Iron and Steel Co. (1873) L. R. 16 Eq. 559. A shareholder 's vote is a right of property, and he may use it as he pleases, whether his motive be proper or improper : Pender v. Liishington, supra. Thus, where a director who held half the shares in a company made a contract to sell a ship of his own to the company and cast his own votes in favour of the contract, it was held that the contract, though voidable, had been adopted, and was binding on the company: North-West Transportation Co. v. Beatty (1887) 12 App. Cas. 589. And see also East Pant Mining Co. v. Merryweather (1864) 2 H. & M. 261. See as to minority rights, notes supra. An executor, administrator, curator, guardian or trustee may vote in respect of any shares held in such capacity; and a pledgor may vote in respect of the shares pledged, s. 42. Joint holders must concur in voting, unless the by-laws provide otherwise, as, e.g. the common form which is to the effect that the person first named in the register shall exercise the voting power. Joint holders of shares by virtue of their property therein are entitled to have their shares so entered on the register, e.g., in the reverse order as to part of the shares, so as to enable them to exercise their voting power in the event of one of them being unable to be present in person at such meetings: Burns v. Siemens Bros. Lim. (No. 2) (1919) 88 L. J. Ch. 21. Executors, etc. Joint holders. Proxy. Proxy. There is no common law right to vote by proxy: Jlarhen v. Phillips (1883) 2 Ch. D. 32; Hoivard v. Hill (1889) 37 W. R. 219. Such right is, however, confer- red by s. 88 (b) in the absence of a contrary provision in the latters patent or by-laws. Under the act, by s. 80 (e) the directors are given the power to pass by- laws wnth reference to the requirements as to proxies. MEETINGS PROXY. 529 and the shareholders have no right to initiate such Sees. 87-88. by-laws: Kelly v. Electrical Construction Co. (1908) 16 0. L. R. 232. If one corporation holds shares in another it may exercise its vote by proxy: Re Indian Zoedone Co. (1884) 26 Ch. D. 70. The chairman's decision as to the validity of proxies is binding on the shareholders, ibid. A proxy may be signed and delivered in blank if subsequently filled up before being used: Ernest v. Loma (1897) 1 Ch. 1. In the absence of any by-law imposing regulations nothing more is necessar^^ to a proxy than its valid execution by the shareholder: Kelly v. Electrical Con- struction Co. (1908) 16 0. L. R. 232. The power to regulate the requirements as to prox- ies under s. 80 (e) \vi\\ not enable the directors to take awav such rights: Canada National v. Hutchinys (1918) 87 L. J. Ch. 106. Under s. 88 (b) it will he sufficient if the proxy becomes a shareholder at any time before he votes: Bombay v. Shroff (1905) A. C. 213. Where proxies are required to be lodged a cer- tain number of hours before a meeting or adjourned meeting it is not a compliance with the requirements to lodge them the specified number of hours before the poll is taken: Shaiv v. Tati Concessions (1913) 1 Ch. 292. Directors may at the company's expense send out forms of y)roxy in which the directors are named accompanied by stamped envelopes for the return of the forms : Peel v. London S N. W. By. (1907) 1 Ch. 5 ; and may employ the company's officers and funds for the purpose of putting their recommendations before the shareholders; nor is it incumbent on the directors in so doing to ])ut forward also tlie arguments of the dissentient sbareliolders' : Campbell v, Australian Mutual (1908) 24 T. L. R. 623. Poll. In the fii'st instance the votes of tlie sliareholders p^u^ present are usii.-dly taken by a show of liaiids without D.r.A.— .34 530 ]W:\IIM()\ COMPANIES ACT. Sees. 87-88. icunrd to the inuuhor of shares or proxies held by the N'oters, and if a poll is demanded it is to be taken in the manner prescribed by the by-laws. The rig-ht to demand a poll is incident to an elec- tion at a pnblic meeting-: Campbell v. Maimd (1835) 5 A. & E. 865, and may be demanded by any single mem- ber in the absence of provision to the contrary. As to the manner of taking a poll it is nsual to require every person who desires to vote to sign a paper headed, as the case may be, *' for " or '* against " the motion. The shares held by each member are then inserted and these having been added np the chairman declares the resnlt. Scrutineers are appointed and report to the chairman. The function of the scrutineers is judicial. Wliere an election of directors is being held, a director who is a candidate is not entitled to act as scrutineer, and if he does the election may be set aside: Dichson v. Murray (1881) 28 Gr. 533. * The shareholders or their proxies must personally attend and vote. A vote can -not be taken by means of polling papers in the absence of statutory or other authority entitling the shareholders to vote in this manner:* McMillan v. Le Roi (1906) 1 Ch. 331. Quaere whether a by-law containing such a provision would be valid under the Dominion Act. The by-laws may provide that a poll shall be taken at a time and place to be fixed by the directors within a certain number of days from the date of the meet- ing, but in the absence of specific provision, s. 49 (2) of the Ontario Act, and corresponding sections in other Acts, will govern, and the poll may be taken as the chairman may direct. In such a case he may direct the poll to be taken then and there: Chillington Iron Co. (1885) 29 Ch. D. 159. See Re Horhury Rridfje (1879) 11 Ch. D. 114, and R. v. B'Oyly (1840) 12 A. «& E. 139. The provision that a poll shall be taken if demand- ed is imperative: Anthony v. Seger (1789) Hagg. Con. Cas. 9. And the meeting is regarded as continuing until the poll is taken: R. v. Wimbledon (1882) 8 Q. B. D. 459. I MEETINGS. 531 Quorum. ^ Sees. 87-88. The directors are empowered by s. 80 (e) to pass Quorum. by-laws fixing the quorum; but the quorum can not be fixed at less than two, for one person will not constitute a meeting: Sharpe v. Daives (1876-7) 2 Q. B. D. 26. In the absence of a quorum no business can be transacted: Hotubeach dc, Co. v. Teague (1860) 5 H. & N. 161 and see Armstrong v. McGihhon (1906) Q. E. 15 K. B. 345, However the company as against an outsider may be precluded from setting up the irregularity, e.g. in the case of bonds in the hands of a bona fide holder which are valid on their face but authorized by a resolution invalid for w^ant of a proper quorum. Wliere a company has furnished a vendor of property with a copy of a resolution of directors, authorizing the purchase, purporting to be regular, the company cannot afterwards claim that the resolu- tion was passed at a meeting at which there was no quorum present: Montreal v. Robert (1906) A. C. 196. As to whether shareholders who are not entitled to vote may assist in forming a quorum, see Doiq V. Mafthetvs (1915) 25 D. L. R. 732 and cases cited: Doig V. Port Echvard Toivnsite Co. (1916) 22 B. C. R. 418. Books of the Company. 89. The company sliall cnusp a book or hooks to ho kept hv i.„„ks slu.il the secn^tarv. or hy pomo oflioi' officer speciallv charijed wit^ contain, thaf fluty, wherein phall be kejjt recorded, — {a) a copy of the letters patent incorporating: the company, riK.rtcr and of any supplcinentary letters patent, and of the pro- agreement, liminary niemorandnm of ao^reement and of all by-laws of '^y"^'''^^'''- the company; {h) the Jiames, alphabetically arranged, of all persons who Names of ai'c or have been shareholders; shareholders. ('•) the address and calling of every snch person, while such Address and shareliolder, as far as can be ascertained ; calling. id) the number of .shares of stock held by each shareholder; Nnraber of ('') the amounts paid in and remaining unpaid, respectively, *^"^^''- on the stock of each shareholder ; and, " ' ^.j^.f""*^'' 532 DOMINION COMPANIES ACT. Sect. 89. Nanios. iid- (Irt'ssos and calling of (liroi'tors. liegister of trausfers. I>ooI;s to be open for insq)ection. Extracts therefrom. -Minute books. (/') (he iiaiiu's, iiddrosses and calliii.i;- of ;iil persons who are or luivo ibeen directors of llic eoiu|);uiy. with the several dales ill wliich eacli lu^cnine or ceased to be such director. 2 K. \\[., e. 15, s. 71. 90. A hook I'alled the register of transfers shall be provided, and in such book sliall be enti'red tbe particulars of every trans- fer of shares in the capital of the company. 2 E. VII., c. 15, s. 74. 91. Such books shall, during reasonable business hours of every day, except Sundays and holidays, be kept open, at the head office or chief place of business of the company, for the inspection of shareholders and creditors of the company, and their persoiuil re])resentativcs, and of any judgment creditor of a shareholder. 2. Every such shareholder, creditor or personal representa- tive or judgment creditor may make extracts therefrom. 2 E. VII., c. 15, s. 75. Under the Imperial Act the importance as evidence attached to the share register is greater than under this Act and the English decisions are to be applied with care. A company will not be allowed to set up its own want of books or improper book-keeping, or neglect to comply with the j)rovisions of the Act: Re Sprouted Food Co., Hudson's Case (1905) 6 0. W. R. 514. And a liquidator is at liberty to draw conclusions as to the liability of contributories from books which are defective or do not comply with the Act: Re Jones S Moore (1908-9) 18 Man. R.' 549. The books mentioned in ss. 89 and 90 are required by s. 91, to be kept at the company's head office. Quaere whether a company is entitled to allow the register of transfers to be kept at the office of a registrar and transfer agent of the company's shares in accordance with the usual practice. Sections 69-69M. require the company to keep a register of mortgages and keep other documents on file in compliance with those sections. Minute Books. There is nothing in the act explicitly requiring minute books to be kept of the proceedings of share- BOOKS OF THE COMPAXY, 533 holders and directors, but in practice this is always Sees. 89-91. done. Sometimes two sets of minnte books are kept, one for directors' and one for shareholders' meetings, which is a convenient practice where it is desired to permit shareholders to inspect the minutes of share- holders' meetings. The minutes of meetings of directors are not properly open to the inspection of the shareholders and a provision entitling share- holders to inspect the books wherein the proceedings of the company are recorded has been held not suffi- cient to entitle them to see the minutes of the proceed- ings of the directors: R. v. Mariquita (1858) 1 E. & E. 289. As minute books are not required to be kept by the act they are not by s. 107 made prima facie evidence of the statements therein contained. See further on evidence the notes to s. 107. Inspection. The right to inspection of the company's books inspection, conferred by s. 91 is limited to shareholders and creditors only. It has been thought, however, that these terms would include persons proposing to occupy either of these positions, though this seems open to doubt. But a person wishing to contract with a com- pany may generally protect himself by securing the permission of the company to examine the books and in practice little difficulty should arise in this regard. It has been held at common law that the books and papers of a company are the property of its share- holders and they are entitled to inspect them, but it lias been further held that there is a duty cast on the shareholders not to disclose * information so ac- quired" and they may be restrained from doing so : Ex p. Brhisley (1866) 36 L. J. Ch. 150. And this rule was held to apply in the case of a shareholder who was also the solicitor for adverse parties engaged in litiga- tion with thf companv: /?. v. Wilts, etc., Navir/ation Co. (1874) 29 L. T. 922. o.'U DOMINION COMPANIES ACT. Sees. 89-91. !>ooks. At eonimoii law tlio riu'lit of a slian^ioldcr to in- spect the books of the company is only a qualified and limited right. In the absence of statutory provisions, inspection will only be permitted by the court where, and to the extent to wliich, it is necessary for the pur]iose of some specific dispute or question pending in which the applicant has a special interest: TJic Bank of Bombay v. Sideman Sonji (1908) 24 T. L. R. 698; and of Rex v. Merchant Tailors' Company, 2 B. & Aid. 115. See also on inspection Merritt v. Copper Crown (1903-04) 36 N. S. R. 383. Where the right is unqualified and statutory the motives of the person seeking to enforce it are imma- terial and the court has no jurisdiction to enquire into them: Davies v. Gas LiyJit and Coke Co. (1909) 1 Ch. 708. The right of inspection ceases when the com- ])anv is in liquidation: In re Kent Coal Fields Syndi- cate (1898) 1 Q. B. 754. A director in virtue of his oflSce has the right at any time and not at board meetings only to see and take copies of documents belonging to the companv : Burn V. London & South Wales Coal Co. (1890-91)" 7 T. L. R. 118. A right of inspection is conferred on the auditor by s. 94b; also on an inspector under s. 92 or s. 93. The making of false entries in the books required to be kept or refusal or wilful neglect to make any proper entry therein or to permit inspection or taking of extracts is an indictable otfence, s. 117, which see. For the penalty imposed on refusal to produce books to an inspector appointed under ss. 92 or 93, see s. 92 (5). Investiga- tion of affairs of company. Inspection, 92. (1) The Secretary of State of Canada may appoint one or more competent inspectors to investisjate the affairs of any company and to report theieon in such manner as the Secretary of State of Canada may. direct, — (i) In the case of any company have a share capital, on the application of shareholders holding such a pro- portion of the issued stock of the company as in the INSPECTION. 535 opinion of the Secretary of State of Canada warrants Sees. 92-94. the application; (ii) In the case of 'a corporation not having a share capital on the application of such number of the persons on the corporation's register of members as in the opinion of the Secretary of State of Canada warrants the applica- tion. (3) The application shall be supported by such evidence as the Secretary of State of Canada may require for the purpose of showing that the applicants have good reason for and are not actuated by malicious motives in requiring, the investigation ; and the Secretary of State of Canada may, before appointing an inspector, require the applicants to give security for payment of the costs of the inquiry. (3) It shall be the duty of all officers and agents of the company to produce to the inspectors all books and documents iii their custody or power. (4) An inspector may examine on oath the officers and agents of the company in relation to its business, and may administer an oath accordingly. (5) If any officer or agent refuses to produce any book or document which under this section it is his duty to produce, or to answer any question relating to the affairs of the company, he shall be liable on summary conviction to a fine not exceeding twenty dollars in respect of each offence. (6) On the conclusion of the investigation the inspectors shall report their opinion to the Secretary of State of Canada, and a copy of the report shall be forwarded by the Secretary of State of Canada to the company and a further copy shall, at the request -of the applicants for tlie investigation, be delivered to them. (7) 'J^he report shall be writtrn or printed, as may be directed. (8) All exi>en.ses of and incidental to the investigation shall be defrayed by the applicants, unless the Secretary of State of Canada directs the same to be paid by the company, whicli the Secretary of State of Canada is hereby authorized to do. Imp. Ad, 1U08, s. 100. 93. (1) A company may by resolution at any annual ^^^'Powenof special general meeting appoint inspectors to investigate its company to ,,fT,,irc appoint ''"'""^- inspectors. (2) Inspectors so appointed shall have the same powers and duties as inspectors appointed by the Secretary of State of Canada, except that, instead of reporting to the Secretary of State of Canada, they shall report in such manner and to such persons as the company by resolution may direct. (3) Officers and agents of tlu! company shall incur the like penalties in case of refusal to produce any book or doriimnnt 53G DOMINION L'OMI'ANIES ACT. Sees. 92-94. voquirod to be prodiu'od to inspectors so ii])pointocl, or to answer - iiny question, as tlioy would have ineurretl if tlio inspectors Imd been appointed liy tlie Secretary of State of Canada. I )))[). Act, 1908,. s. 110. Report of 94. A copy of the report of any inspectors ap|)oiiited under bTe%ddenco^'^ ^^^^^ ^^^' authenticated by the seal of the company whose affairs they have investigated, sliall l)e admissible in any leo^al proceed- ing as evidence of the opinion of the inspectors in relation to any matter contained in the report. Imp. Act, 1908, s. HI. 7 & S Geo. V. (1917), c. 25, s. 11. These sections were enacted by 7 & 8 Geo. V. (1917) c. 25 repealing- the then existing similarly numbered sections. The inspector is now appointed by the Secretary of State and not by a jndg-e as formerly, and no stated proportion of shareholders or members are required to join in the application, the proportion which will warrant the granting of the application being left to the discretion of the Secretary of State. The procedure above provided for has been little used in Canada, or in England under the correspond- ing sections of the Imperial Companies Act (1862) ss. 56-61 and (1908) ss. 109-111. The object of the section is merely to afford a minority of the shareholders an opportunity of obtaining information which they could not otherwise obtain. The inspector does not occupy a judicial or quasi-judicial position, and when he has made his report his duties are at an end. The report can not be made the foundation of any subsequent proceeding; nor will the report be evidence of the existence of any fact therein stated, or be binding on the company or anyone else, but if duly authenticated it will be admis- sible in any legal proceeding as evidence of the opin- ion of the inspector, s. 94; Re Grosvenor Sc. Hotel Co. (1897) 76 h.T. ?y?J ', Re Totvn Topics Co., Ltd. (1911) 20 Man. L.R. 574. It seems unlikely, in the absence of de- cided cases to the contrary, that the fact that the inspec- tor under s. 92 is now to be appointed by the Secretary of State and that the report is to be made to the latter instead of to a judge will make the foregoing cases cease to be applicable. The Dominion Act contains no provi- INSPECTION. 537 sion corresponding to s. 29 of the Ontario Act R. S. 0. Sees. 92-94. (1914) c. 178 for the revocation of letters patent by the Secretary of State, the application of s. 27 of the Dominion Act being limited to forfeiture for non-user. To justify the making of an order " it should appear that there is reason on substantial grounds to believe that material information regarding the affairs or management of the company is being con- cealed or withheld from shareholders whose interests entitle them to the disclosure ": i?e Toum Topics Co. Ltd. (1911) 20 Man. L. R. 574, per Robson, J., at p. 576. To show mismanagement by the directors is not enough, ibid. The fact that no dividends have been declared by a profit making company has been held insufficient to warrant an order under s. 92 as it originally stood: Be Saniia Banchuin Co. (1915) 8 W. W. R. 697. The court never interferes to prescribe to a company what it shall do as to its own purely internal affairs: Lambert v. Neuchatel Asphalte Co. (1882) 30 W. R. 914. 94a. (1) Every company shall at each annual ffoneral meet- Appointmejit inf^ appoint an anVlitor or auditors to hold office until the next qiuI romun- ' ' 1 .• eration of annual .sreneral meeting. auditors. (2) If an appointment of auditors is not made at an annual general meeting, the Secretary of State of Canarh may, on the application of any shareholder of the company, appoint an auditor of the company for the current year, and fix the remuneration to he paid to him by the company for his services. (3) .'\ director or officer of the company shall not be capable of being appointed auditor of the company. (4) A person, other than a retiring auditor, shall not be capable of being appointed auditor at an annual general meet- ing unless notice of an intention to nominate that person to the office of auditor has been given by a shareholder to the coriipany not less than fourteen days before the aiunial general meeting; and the company shall send a copy of any such notice to the retiring auditor, and shall give notice thereof to the shareholders, cither by advertisement or in any other mode pro- vided by the by-laws of the company not less than seven days before the annual general meeiing: Provided that if, after notice of the intention to nominate an andilor has been so given, an annual general meeting is called for a date fourteen days or less after the notice has been given, tiic notice, though not given wit Inn the lime re(|iiired by 538 DOMINION COMPANIES ACT. Sects. Ibis provision, shall be deemed to have been properly given for 94.V-94B. the purposes thereof, and the notice to be sent or given by the company may, instead of being sent or given within the time i-ecjuired by this provision, be sent or given at the same time as the notice of the annual general meeting: Provided, however, that a person other than a retiring auditor may be appointed tniditor of the company at an annual general meeting as herein- before provided, upon a resolution passed by the votes of share- holders present in person or by proxy and holding at least two- thirds of the subscribed stock represented at the meeting. (5) The first auditors of the company may be appointed by tlie directors before the first annual general meeting, and if so appointed shall hold office until the first annual general meet- ing, unless previously removed by a resolution of the company in general meeting, in which case the company at that meeting nuiy appoint auditors. (6) The directors may fill any casual vacancy in the office of auditor, but while any such vacancy continues the surviving or continuing auditor or auditors, if any, may act. (7) Tlie remuneration of the auditors of a company shall be fixed by the company in general meeting, except that the remuneration of any auditors appointed before the first annual general meeting, or to fill any casual vacancy, may be fixed by the directors. Jmp. Act, 1D08, s, 112. auditors. Powers and 94b. (1) Every auditor of a company shall have a rigbt ^.".^;^^f^^ of access at all times to the books and accounts and vouchers of the company, and shall be entitled to require from the directors and officers of the company such information and explanation as may be necessary for the performance of the duties of the auditors. (2) The auditors shall make a report to the shareholders on the accounts examined by them, and on every balance sheet laid before the company in general meeting during their tenure of office, and the report shall state, — (a) whether or not they have obtained all the information and explanations they have required ; and (h) whether, in their opinion, the balance sheet referred to in the report is properly drawn up so as to exhibit a true and correct view of the state of tbe company's affairs according to the best of their information and the ex- planations given to them, and as shown by tbe hooks of the company. (3) The balance sheet shall be sigjied on behalf of tlie board by two of the directors of the company, and tbe auditors' report .shall be attached to the balance sheet, or there shall be inserted at the foot of the balance sheet a reference to the report, and the report shall be read before the company in general meeting, and shall be open to inspection by any shareholder. AUDITORS. 539 (4) Thereafter any shareholder shall be entitled to be Sects, furnished with a copy of the balance sheet and auditors' report 94b-94o. at a charge not exceeding ten cents for every hundred words. ■ (5) If any copy of a balance sheet which has not been signed as required by this section is issued, circulated or pub- lished, or if any copy of a balance sheet is issued, circulated, or published without either having a copy of the auditors' report attached thereto or containing such reference to that report as is required by this section, the company, and every director, man- ager, secretary, or other officer of the company who is knowingly a party to the default, shall on summary conviction, be liable to a fine not exceeding two hundred dollars. Imi). Act, 1908, s. 113. 94c. Holders of preference shares and debentures of aliiglitsof company shall have the same right to receive and inspect the giiareholders, balance sheets of a company, and the reports of the auditors and etc., iincii)]es or not, or wliether the directors have been acting williin r)4(t HO.MIMON' COMi'AMKS ACT. Sects. tluMi- powers : Loudou dud Goicnd Ttdiik (No. 2) [1895] 9^^-94<-. L>Ch. p. 682. Auditors. Tlio aiiditoi' Will ascertain the true financial iiosi- tion of the com])any by examining its books, and lie must take reasonable care to ascertain that the books show the comi^any's true position: London and Gen- eral Banlv, supra. Where the expression "as shown by tlie books of the company" is introduced into the auditor's certifi- cate, this does not mean a mere verification of the l)alance sheet by the entries in the books, but it Avill relieve the auditor from responsibility for matters kept out of the books and concealed from him. If the auditor has formed the opinion that the assets are over valued he is bound to say so, but it seems that there is no duty to form and express an opinion as to the value of the company's assets: Lon- don and General Bank (No. 2) [1895] 2 Ch. 673. Having completed his investigation, the duty of the auditor is to give to the members information, and not merely means of information of the result. His duty is to convey information in direct and express terms, not merely to arouse enquiry : London and Gen- eral Bank (No. 2) [1895] 2 Ch. 673', 684, 685, 694. It is true that under some circumstances much commercial injury might be done by publicity in a printed docu- ment circulated among a large body of shareholders, and it is possible that if publicity would be very in- jurious, an auditor would discharge his duty if he made a confidential report to the shareholders and in- vited their attention to it, and told them where they could see it. But an auditor who gives shareholders means of information instead of information does so at his peril: London and General Bank (No. 2) [1895] 2 Ch. 673, 684, 685, 694. If the auditor does not discharge his duty, and, as the natural and immediate consequence of his breach of duty, acts are done, such as the payment of divi- dends out of capital, which are a misapplication of the company's funds, the auditor is liable: Leeds Estate Co. V. Shepherd (1887) 36 Ch. D. 787. AUDITORS. 541 ** It is no part of an auditor's duty," as Lindley, Sects. L.J., said, in Re London and General Bank (No. 2) 94a-94c. (1895) 2 Ch. 673, 682, "to give advice either to direc- tors or shareholders as to what they ought to do. *'An auditor has nothing to do with the prudence or imprudence of making loans with or without secu- rity. It is nothing to him whether the business of a company is being conducted prudently or imprudently, profitably or unprofitably. It is nothing to him whether dividends are properly or improperly de- clared, provided he discharges his own duty to the shareholders. His business is to ascertain and state the true financial position of the company at the time of the audit, and his duty is confined to that. But then comes the question : How is he to ascertain that posi- tion? The answer is, by examining the books of the company. But he does not discharge his duty by doing this without inquiry and without taking any trouble to see that the books themselves show the company's true position. He must take reasonable care to ascertain that they do so. Unless he does this, his audit would be worse than an idle farce. Assuming the books to be so kopt as to shew the true position of a company, the auditor has to frame a balance-sheet showing that position according to the books, and to certify that the balance-sheet presented is correct in that sense. But his duty is to examine the books, not merely for the pur- pose of ascertaining what they do show, but also for the purpose of satisfying himself that they show the true financial position of the company. This is quite in accordance with the decision of Stirling, J., in Leeds Estate Co. v. Slieplierd (1887) 36 Ch. D. 802. An andi tor, however, is not bound to do more than exercise reasonable care and skill in making inquiries and in- vestigations. He is not an insurer; he does not guar- antee that llic l)ooks do correctly show the true posi- tion of the company's affairs; he does not even guaran- tee that his balance-sheet is accurate according to the books of tlie company. If he did, li<' wonld be respon- sible for ail crior on liis part, even if he were himself Auditors. 542 DOMINION rOlMPANIES ACT. Sects, doceived without any want of reasonable care on liis 94\-94c\ part, say, by the t'raudiUent conceahnent of a l)()ok from him. His obli.ii'ation is not so onerous as this. Such !• take to be the duty of the auditor : He mus't be honest — i.e., he must not certify what lie does not be- lieve to be true, and he must take reasonable care and skill before he believes that what he certifies is true. What is reasonable care in any particular case must depend upon the circumstances of that case. Where there is nothing to excite suspicion, very little enquiry will be reasonably sufficient, and, in practice, I believe, business men select a few cases at haphazard, see that they are right, and assume that others like them are correct also. Where suspicion is aroused, more care is obviously necessary; but, still, an auditor is not bound to exercise more than reasonable care and skill even in a case of suspicion, and he is perfectly justified in acting* on the opinion of an expert where special knowledge is required. But an auditor is not bound to be suspicious as distinguished from reasonably care- ful. " Lopes, L.J., in Re Kingston Cotton Mills Co. {No. 2) [1896] 2 Ch. 284, also says:— '^Auditors must not be made liable for not tracking out ingenious and care- fully laid schemes of fraud when there is nothing to arouse their suspicion, and when these frauds are per- petrated by tried servants of the company and are undetected for years by the directors. So to hold, would make the position of an auditor intolerable." An auditor may be made liable on a misfeasance summons under s. 123 of the Winding-up Act: King- ston Cotton Mills Co. {No. 2) (1896) 2 Ch. 279. Auditors are bound to acquaint themselves with their duties under the provisions of the Act. If the balance sheet fails to show the true financial position of the company, and the company suffers damages thereby, the onus is on the auditors of showing that the damage is not the result of their breach of duty : Re Republic of Bolivia Syndicate, Limited {No. 2) (1914) 1 Ch. 139. Semhle, also in the same case that adequate AUDITORS. 543 warning or identification in accounts as to wrongful Sects, payments appearing therein bringing such wrongful 94a-94c. payments to the company's notice will exonerate the auditors. See also on duties of auditors annotation in (1912) 6 D. L. E. 524; Re Oiven Sound Lumber Co. (1916-7) 38 0. L. R. 414. Where in a contract between the company and an , officer it is provided that the latter 's remuneration is to be ascertained by the auditors' certificate as to net profits, if the certificate of the auditors is based on a wrong principle, it is not conclusive and binding upon the parties: Johnston v. Chestergate (1915) 84 L. J. Ch. 914. Directors are not bound to test the accuracy of auditors' accounts: Dovey v. Cory (1901) A. C. 477, Quaere, whether auditors can give a certificate ad hoc: Johnston v. Chestergate, supra, per Sargant, J., at p. 917. Whetlier the auditor's right of access is restricted "Books.ac- jiin . ^^ -u 1 ' 1 T counts and to books or account, or covers all books, mcludnig vouchers." minute books and documents, appears to be not alto- gether free from doubt. In the opinion of Palmer, ''Company Law," 9th ed., p. 230, the corresponding section of the Imperial Act, viz., 113 (1), confers this wide right of access, but there is no interpretative sec- tion in our Act stating that "books and papers" and "books or papers" include accounts, deeds, writings and documents." As to procedure for right of access to books and records, see Baldivin v. Bawden (1912) 6 D. L. R. 520. Procedure. 95. Any .'^uiiiinons, notice, order or other process or (locuinent Service of ref(iiired to be served upon the company, may be served by pi'oces.s upon leaving the same at the office of the company in the city or town ''o'"P""J'- in which its chief place of business in Canada is siliiate, with any adult person in the employ of the company, or by servini^ the same on the president or .secretary of the company, or by leaving the same at the domicile of either of them, with any adult per.son of his family or in his employ. 044 DOMINION COM TAX IKS AW. Sects. 2- If the coinpiiiiv lias no know ii (tHice or chief phice of busi- 95-100. iiess, and has no known presiilent or secretary, the court may — — .— order such publication as it deems reiuiisite to be made in the premises; and sueii })uulicat](m shall be deemed to be due service upon the company. 2 E. \'IT., c. 15, s. 80. service. Cases where use of seal not neces- sary. Service of notices on members. 96. Any suiunions, notice, order or proceeding refjuiring authentication by the company may be signed by any director, manager or odier authorized officer of the company, and need not be under the seal of the company. 2 E. VTL, c. 15, s. 81. The section contemplates two classes of documents : those of an extra-judicial and those of judicial char- acter. As to the latter, court process must be served, according- to the local rules of procedure in force and applicable. For the rules as to such cases in Ontario see Holmested, Judicature Act, 4th ed., p. 341. 97. Notices to be served by the company upon the share- liolders may be served either personally or by sending them throngh the post, in registered letters, addressed to the share- holders at their places of abode as they appear on the books of the company. 2 E. VII., c. 15, s. 82. See ss. 87^and 88. Time from 98. A notice or other document served by post by the cora- eerv'ice P^^^3' on a shareholder shall be deemed to be served at the time reckoned. when the registered letter containing it would be delivered in the ordinary course of post. 2 E. VII., c. 15, s. 83. Actions be- 99. Any description of action may be prosecuted and main- tween com- -(-j^jj-^g^ between the company and any shareholder thereof. 2 E. shareholders. \ II-, C. 15, S. 85. Setting forth incor- poration in legal pro- ceedings. 100. In an action or other legal proceedings, 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 Part. 2 E. VTT., c. 15, s. 86. Section 99 may be regarded as declaratory. It is a well settled principle that the company as a body is entirely distinct from the shareholders who compose it, and this rule applies even to a ''one man compan3^" See Rielle v. Reid (1899) 26 A. R. 54; Salomon v. Salo- mon [1887] A. C. 22; Wood v. Beesor (1895) 22 A. R. 57. PKOCEDUEE. 545 Whatever doubts may have existed at the time Sects, when the Joint Stock Companies Acts were first 9 5-100. passed, respecting the right of a shareholder to sue the company, it is now clear that such a right would exist without any statutory enactment such as sec. 99. By the Imperial Companies Act the certificate of Effect of registration is made ''conclusive evidence" that all the iio&iii. requirements in regard to registration have been com- plied with. See Dominion Act, ss. 110, 111. The eifect of these and similar sections is that where an action is brought by a company the defendant cannot set up by way of defence that the charter of the company was obtained by fraud, etc., or otherwise irre- gularly. In the absence of such provisions irregularity in obtaining a charter would afford a defence to an action by the company. And where a company was incor- porated under an Ontario Act which had no similar provisions, it was held to be open to the defendants to sliow that the corporate character had never been ' obtained in consequence of the non-performance of conditions plainly required to be precedent to the right to acquire corporate status: Hamilton and Flamhoro Road Co. V. Toivnsend (1887) 13 A. R. 534. See Re National Debenture and Assets Corporation [1891] 2 Ch. 505; Re Laxon & Co. (No. 2) [18921 3 Ch. 555; Oal-rs V. Tnrquand (1867) L. R. 2 H. L. p. Z^^] Salomon V.Salomon [1897] A. C. 22. The Dominion Act, s. Ill, expressly excepts pro- gctre /oci ceedings by scire facias or otherwise for the purpose of rescinding or annulling letters patent, but such pro- ceedings may be taken, even in the absence of such provision. Where the Crown is imposed on by a false sugges- tion, or where a grant has been made by mistake or in igiioraTice of some material fact, or it has granted any- tliing which by law it cannot, it may by its prerogative repeal its own grant. And where by several letters n.c.A. — 35 as. 54G DOMINION COMPANIES ACT. Sects, patent the self-same thing has been graiited to several 95-100. persons, the first patentee is permitted in the mean- ^T^Tun^"" time at the suit of the Crown to repeal the subseciuent 'vltent letters patent. And in every case of a patent so g-ranted which is injurious to another, the injured party is permitted to use the name of the Crown in a suit by scire facias for the repeal of the grant. 2 Wms. Saund. 72, Notes; R. v. Bailiffs of Bewdley (1712) 1 P. Wms. 207; Maijor of Colchester v. Brooke (1845) 7 Q. B. 385; Rerj. V. Arnaud (1846) 9 Q. B. 806; Banque d'Eoche- laga v. Murray (1889) 15 App. Cas. 414. The action will also lie where a company is author- ized to carry on business provided a certain condition is complied with, and there is not compliance. Thus, where a company by its Act of incorporation was authorized to carry on business provided $100,000 of its capital stock were subscribed for and thirty per cent, paid thereon, within six months after the passing of the Act, and only $60,500 had been bona fide sub- scribed prior to the commencing of the operations of the company, the balance having been subscribed for by G. in trust, who subsequently surrendered a portion of it to the company, and the thirty per cent, had not been in fact paid thereon, it was held that this being a Dominion statutory charter proceedings to set it aside were properly taken by the Attorney-General of Can- ada, and that the bona fide subscription of $100,000 within six months from the date of the passing of the Act of incorporation, and the payment of the thirty per cent, thereon, were conditions precedent to the legal organization of the company with power to carry on business, and as these conditions had not been bona fide and in fact complied with within such six months the Attorney-General of Canada Avas entitled to have the company's charter declared forfeited: Dominion Salvage and Wrecking Co. v. Attorney -General of Can- ada (1892) 21 S. C. E. 72. And in a proper case, such as a charter obtained by fraudulent application for letters patent, the defend- ant, in an action by the company, may apply to the PROCEDUKE. 547 Attorney-General to obtain a writ of scire facias with Sects, the object of defeating the plaintiff's action against 95-100. him: Bauque d'Hoclielaga v. Murray (1889) 15 App. Cas. 414. See also on scire facias Gie des Boissons v. Pro- cureur General (1906) Q. R. 15 K. B. 546, and on can- cellation A. G. V. Toronto Junction Recreation Club (1904) 8 0. L. E. 440. See also notes to s. 27. Scire facias was formerly held to be a proper and Against a appropriate proceeding against a shareholder by a ^ ^^ ° ^^' creditor who holds an unsatisfied execution against the company: Brice v. Miniro (1885) 12 A. R. p. 465; Moore v. Kirkland (1856) 5 C.P. 452; Jenkins v. Wil- cock (1862) 11 C. P. 505; Fmser v. Hickman (1863) 12 • C. P. 584; Tijre v. Wilkes (1856) 13 U. C. R. 482. See also Union Fire Insurance Co. v. Fitzsimmons (1882) 32 C. P. 602; Attorney-General v. Vaughan Road Co. (1892) 19 A. R. 234; and 21 S. C. R.*631;j Attorney-General v. Niagara Falls S Clifton R. Co. (1891) 18 A. R. 453. A copy of a by-law of the company under its seal Evidence, and purporting to be signed by an officer of the com- pany, is prima facie evidence of the by-law under s. 109. Certain of the books of the com])any are also made prima facie evidence of all facts purporting to be stated in them. See s. 107 infra. As to the evidence by which the fact of incorpora- tion and the contents of tlio letters patent are proved, see ss. no and 111. Tn actions corpoi-ations may usually be served by Actions serving tlie pi-esident, cashier, treasurer, secretary, Spa.des. clerk or otlier nufnt of the corporation. See s. 95. P)nt wlici'e Uic j)laintiff o])tained judgment by de- fault in any action against the defendant company of wiiich he was president, and the writ in the action was served upon plaintiff only, and there was no other service upon, or notice of the pendency of the action '-civen to, anyone connected with the company or con- cerned in its affairs, it was held that the mode of scr- 548 l»()Mi>;iU^' COMrANlKS A('' Sects. \ ico adopted M^as one tliat could not be adopted, and ^^•^QQ- that the judge to whom the application was made had the right to set it aside as an abuse of the process of the Court: TIoh)ies v. Steiviacke Railway Co. (1899) 32 N. S. R. 395. Actions Service on the liquidator of a company is not good ftlXlllDSt • (ompanies. service ou the comi)an3^: Re Floiuers (1896) 75 L. T. 306. A colonial government and a foreign government are not considered to be corporations: Sloman v. Governor of New Zealand (1876) 1 C. P. D. 563. As to the residence of a corporation, see Bank of Nova Scotia v. McKinnon (1892) 12 C. L. T. US; Bank of Toronto v. Pickering (1919) 17 0. W. N. 161, and notes to s. 30. An action for deceit will lie against a corporation : Moore v. Ontario Investment Association (1888) 16 0. R. 269; Barwick v. English Joint Stock Bank (1867) L. R. 2 Ex. 265 ; Nelles v. Ontario Investment Association (1889) 17 0. R. 129. And it may also be liable for false imprisonment under an order of its agent acting within the scope of its authority: Ltjden v. Magee (1888) 16 0. R. 105, but not where the act was one the company ''could not legally have done": Emerson v. Niagara Navigation Co. (1883) 2 0. R. 528. As to description of a company in a writ of sum- mons, see Bank of British North America v. Hoivley, 14 Que. S. C. 422. A corporation has the same right as an individual to withdraw its name from litigation to which it has been made a party plaintiff, but of which it does not approve: International Wrecking Co. v. Murphy (1888) 12P. R. 423. The company itself is the proper plaintiff in actions for injury to the corporate property, and such an ac- tion by shareholders alone, showing no reason why the company has not instituted the proceedings, cannot be sustained. PEOCEDURE. 549 But where the complaint was that a majority of the Sects, shareholders had obtained possession of the company's 95-100. name and the control of its seal, and were using it im- properly for their oa\ti benefit and causing injury to the company's property, it was held that an action could be sustained in the name of one or more share- holders, on behalf of themselves and all others except defendants, against the company and the majority of the shareholders: Wilherforce Educational Institute v. Holden (1884) 17 0. R. 439. As to an action brought in the name of the company after a liquidator has been appointed, see Sarnia Agricidtural Implement Manufacturing Co. v. Hutch- inson 0S8^) 17 O.'R. 676. In order that an action by one shareholder may be maintained on behalf of the company, though he sues on behalf of himself as well as all shareholders other than the defendants, it is not sufficient to show that the company was under the absolute control of the defend- ants in the action, unless it is clearly indicated that the control was exercised at the time the action was com- menced: Weatherbe v. Whitney (1897) 30 N. S. R. 49. Where an action is taken by the shareholders of a company against a shareholder-director such defend- ant should be excepted from the general body of share- holders referred to in the style of cause as plaintiffs : Wheeler v. Freame and Alberta Farmers (1914) 7 W. W. R. 191. Where the defendant referred to the directors as having appointed themselves by fraudulent means, and stated that all business transacted by them was con- trary to law, it was held tliat the statement was de- famatory of the plaintiff company, and the company mi gilt sue for libel : Given Sound Buildinp and Savin r/s Society V. Meir (1893) 24 O. R. 109. Sei' also Journal Print iufj Co. v. McLean (1894) 25 0. R. 509. Where a man was initiated into a secret order in the presence of Ihe princii)al officers and a number of menil)ers of the order, and was injured by rough usage, it was held tliat proceedings must be taken to have been 550 DOMINION COMPANIES ACT, Sects. doiio with llio consent of the cori)ornte body, and -that 95-100- ti,^. defendants were liable in damag-es for the injnries snstained: Kinver v. Phamix Lodge I. 0. 0. F. (1885) 7 0. R. 377. Where a contract is ultra vires of a company, but a consent judgment is obtained upon it, the question of ultra vires not having been raised on the pleadings or facts stated, it has been held that the consent judgment was of no greater validity than the contract, and that an action would lie to set it aside : Great N orth-W est Ry. Co. V. Charlebois [1899] A. C. 114. Actions Where the plaintiff was employed by one of the companies, provisioual directors of the defendant railway com- pany to do certain work on behalf of the company in advertising and promoting its undertaking and the evidence established that this director was intrusted by the company with the performance of the various duties necessary for the purpose of promoting and furthering the undertaking; and that he did this, from time to time, without any specific instructions from his co-directors at formal meetings of the board, everything being done in the most informal manner; but that they were fully cognizant of what he did and of his manner of doing it, and vested in him, either tacitly or by direct authorization, the right and authority to transact the business of the company. Held, that the plaintiff was entitled to re- cover from the company the value of his work : Allen v. Ontario and Rainy River R. Co. (1898) 29 0. R. 510. As to an action for goods supplied to an inchoate company, see Seiffert v. Irving (1888) 15 0. R. 173. AVliere by an Act extending the powers of a gas company certain duties and obligations were imposed on it for the benefit of its customers with a view to the reduction of the price of gas contingent on the amount of surplus net profit, but no pecuniary penalty was imposed for default and no right of action given to persons aggrieved, provision, however, being made for its accounts being audited by direction of the mavor of the corporation with whose assent the com- PBOOEDURE. 551 paiiy was originally established. Held, that no individ- Sects, ual customer had a right of action against the company 95-100- for non-compliance with the provisions of the Act. Such a right only arises where given by the Act, and especially so where the Act, as in this case, is in the nature of a private legislative bargain and not one of public and general policy: Johnston and Toronto Foundry Co. v. Consumers' Gas Co., (1898) A. C. 447. See also Montreal Street Raihvay Co. v. Ritchie, 16 S. C. R. 622; Flatt v. Waddell, Townsend v. Wad- dell, 18 0. R. 539; McSherry v. Commissioners of the Colour q Toivn Trust (1880) 45 U. C. R. 250; Walms- ley V. Rent Guarantee Co. (1881) 29 Gr. 484; Wilson V. JFAna Life Assurance Co. (1879) 8 P. R. 131; Chris- topher V. Noxon (1884) 4 0. R. 672. And as to the examination of a company as a judgment debtor, see Charlebois v. Great North-West R. Co. (1892) 15 P. R. 10. As to proceedings against companies by summons or indictment, see The Queen v. Toronto Raihvay Co. (1898) 30 0. R. 214; Re Chapman S City of London (1890) 19 0. R. 33. 101. AVhenever the interest in any shares of the capital stock Procedure of the company is transmitted by the death of any shareholder o^viTo^rshin or otherwise, or whenever the ownership of any shares or the when shares legal right of possession of the same changes by any lawful •■>'■'' i^ ran s- nieans, other than by transfer according to the provisions of this ^visetban Part, and the directors of the company entertain reasonable by transfer, doubts as to the legality of any claim to such shares, the com- pany may make and file in the court in the province or territory in which the head ofTice 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 1o the person in whose name such shares stand in the ^ . , _ , books of the company, and praying for an order or judgment court may adjudicating and awarding the said shares to the person or be obtained persons legally entitled to the same. 2 E. VII., c. 15, s. 53. "" Petition. 102, Xotice of tiie intention to present such petition shall be Notice of given to the person claiming such shares, or to the attorney of i"tention such person duly authorized for the purpose, who shall, upoji the filing of such petition, establish his riglit to the shares reforred 552 DOMINION COMPANIES ACT. Sects 102-10 riead-ir:. r.»;!s. to in such petition; and tlic time to })loa(l and all otlier pro- 5. ooedings in such cases shall be the same as those observed in analogous cases before such court. 2 E. VII., c. 15, s. 53. 103. The costs and expenses incurred by the company in procuring such order or judgment shall be paid to the company by the person or persons to whom sueli shares are declared law- fully to belong and such shares shall not be transferred in the books of the company until such costs and expenses are paid, but this provision shall in no way prejudice the right of the person adjudged to be the lawful owner of such shares to re- course according to the practice of the court for such costs and expenses against any person contesting his right to such shares, 2 E. VII., c. 15. s. 53. Oi-fler to guide coi:i- pany. Order a release. 104. The company shall be guided by the order or judgment of the court establishing the riglit to such shares. 2. Such order or judgment shall have the effect of a release from every other claim to the said shares or arising in respect thereof and shall fully indemnify and save harmless the said company from any such claim. 2 E. VII., c. 15, s. 53. The procedure laid down by these sections does not appear to have been made much use of; for a case in the province of Quebec, see In re Denoon (1899) Q. R. 15 S. C. 567. "Where there are competing claim- ants for shares the proper course for the company is to interplead, Re Underfeed Stoker Co. (1901) 1 0. L. R. 42. For the procedure on the death of a shareholder and an application for registration by his executors or administrators or a transfer from them, see the notes to ss 64ff. " Transfer of Shares." Annual meeting. Balance sheet. Statements and Returns. 105. (1) An annual meeting of t1ie company shall bo hold at such time and place in each year as the special Act, letters patent, or by-laws of the company provide, and in default of such provisions in that behalf an annual'meeting shall be held at the place named in the special Act or letters patent as the place of the head office of the company, on the fourth Wednesday in January in every year. (2) At such meeting the directors, shall lay before the company, — (a) a balance sheet made up to a date not imore than four months before such annual meeting : Provided however that a company which carries on its unrlertaking out of STATEMENTS AXD KETIIENS. 553 Canada may, by resolution at a general meeting, extend Sect. 105. this period to not more than six months; (&) a general statement of income and expenditure for the financial period ending upon the date of such balance sheet ; (c) the- report of the auditor or auditors; (d) such further information respecting the company's financial position as the special 'Act, letters patent or by-laws of the company require. (3) Every balance sheet shall be drawn up so as to distin- Details of guish severally at least the following classes or assets and balance liabilities, namely : — ^^^*- (a) cash; (b) debts owing to the company from its customers; (c) debts owing to the company from its directors, officers and shareholders respectively; (d) stock in trade; (e) expenditures made on account of future business; (/) lands, buildings, and plant ; (g) goodwill, tfranchises, patents and copyrights, trade- marks, leases, contracts and licenses; (h) debt owing by the coonpany secured by mortgage or other lien upon the property of the company; (i) debts owing by the company but not secured; (;■) amount of common shares, subscribed for and allotted and the amount paid thereon, showing the amount thereof allotted for services rendered, for commissions or for assets acquired since the last annual meeting; (k) amount of preferred shares subscribed for and allotted and the amount paid thereon, showing the amount thereof allotted for services rendered, for commissions or for assets acquired since the last annual meeting; (?) indirect and contingent liabilities, Ontaiio Companies Act, s. JfS. (m) amount Avritten off on account of depreciation of plant, machinery, good-will and similar items. Neir. 7-8 Geo. v., 1917, c. 25, s. 12. See the notes to ss. 87ff. supra. 106. (1 ) Every company having a share capital shall, on or vnuunl before the first day of June in every year, make a summary as rctnras. of date the thirty-first day of March preceding, specifying thi^ following particulars : — ('/) The coi-porato niimc ol' Hie conipiiiiy; Particulars. (/>) The manner in which the coni|);iiiy is iii(or|)or!itpd whether by special Act or by letters patent and the date thereof; 554 DOMINION COMPANIES ACT. Sect. 106. Summarj' to be filed signed and verified. Penalty for default. ((') The place of the lioad oflice of the company, giving the stroot and nnniber thereof when possible; ((/) The date \i\)on which the last annual nieeling of share- holders of the company was held; (c) The amount of the share capital of the company, and the mimher of shares into which it is divided; (/) The number of shares taken from the commencement of the company up to the date of the return; (g) The amount called up on each share; (/() The total amount of calls received; (i) The total amount paid on shares otherwise than in cash, showing severally the amounts paid by services, commissions or assets acquired since the last annual return ; (/) The total amount of calls unpaid ; (Ic) The total amount of the sums (if any) paid by way of commission in respect of any shares, bonds or deben- tures, or allowed by way of discount in respect of any bonds or debentures; (1) The total number of shares forfeited, and the amount paid thereon at the time of forfeiture; (m) The total amount of shares issued as preference shares and the rate of dividend thereon, and whether cumulative ; (n) The total amount paid on such shares; (o) The total amount of debentures, debenture stock or bonds authorized and the rate of interest thereon ; (p) The total amount of debentures, debenture stock or bonds issued; (q) The total amount paid on debentures, debenture stock or bonds, showing severally the amounts of discount thereon and the amounts issued for services and assets acquired since the last annual return ; (r) The total amount of share warrants issued; (s) The names and addresses of the persons who at the date of the return are the directors of the company, or occupy the position of directors, by whatever name called. (2) The said summary must be completed and tiled in duplicate in the Department of the Secretary of State of Canada on or before the first day of June aforesaid. Each of the said duplicates shall be signed by the president and the manager or, if these are the same person, by the president and hy the secre- tary of the company, and .shall be duly verified by their affidavits. There shall also be filed therewith an affidavit proving that the copies of the said summary are duplicates. New. (3) If a company makes default in complying with any requirement of this section it shall be liable to a fine not exceeding twenty dollars for every day during which the default continues, and every director and manager of the company who knowingly and wilfully authorizes or permits the default shall ANNUAL EETURNS. 555 be liable to the like penalty, and such fines may be recoverable Sect. 106. on summary conviction. Ontario Companies Act, sec. ISJf. in - " part, and Inipeiial Companies Act, sec. 26 in part. (4) The Secretary of State of Canada, or an official of the Endorsement Department of the Secretary of State of Canada designated for »f summary, that purpose, shall endorse upon one duplicate of the above summary the date of the receipt thereof at the Department of the Secretary of State of Canada, and shall return the said duplicate summary to the company and the same shall be retained at the head office of the company available for perusal of for the purpose of making copies thereof or extracts therefrom by any shareholders or creditor of the company. New. (5) The duplicate of the said summary endorsed as afore- Proof of said shall be prima facie evidence that the said summary was *^"' orsemen . filed in the Department of the Secretary of State of Canada pursuant to the provisions of this section on any prosecution under subsection (3) of this section, and the signature of an official of the Department of the Secretary of State of Canada to the endorsement of the said duplicate shall be deemed frima facie evidence that the said official has been designated to affix his signature thereto. New. (6) A certificate under the hand and seal of office of the fi^^ijofof Secretary of State of Canada that the aforesaid summary in fi1esu^.° duplicate was not filed in the Department of the Secretary of mary. State of Canada by a company pursuant to the provisions of this section shall be prima facie evidence on a prosecution under subsection (3) of this section that such summary was not filed in the Department of the Secretary of State of Canada. New. (7) Companies organized after the thirty-first day of lAlardi S^m^^t"^^^ in any year shall not be subject to the provisions of this ^^^^"^ • section until the thirty-first day of March of the following year. New. (8) The name of a company which, for three consecutive Effect of years, has omitted to file in the Department of the Secretary ^^/^"Jj^^J? fo? of State of Canada the said annual summary may be given in "three years, whole or in part to a new company unless the defaulting com- pany, on notice by the Secretary of State of Canada by regis- tered letter addressed to the company or its president as shown by its last return, proves to the satisfaction of the Secretary of State of Canada that it is still a subsisting company : Provided that if at the end of one month from the date of such nolice, the Secrelary of State of Canada has not received from the com- pany or its president response to such notice, the company may be deemed not to be a subsisting corporation, and no longer entitled to the sole u.se of its coryiorate name: Tro- vided also that when no annual summary has been filed by a company for three years imincdiafcly following its incorporation its name may be given to another company without notice, and .')')() DOMINIOX COMPANIES ACT. Sect. 106. ^uc'h t'onipaiiy sluill ho (leciuod not to be siihsistiiig. Ontario Companies Act, sec. SO. Application (D) This section sliall. iinddtis niiifandis, bp applioahlc to of section. corporations without share capital with respect to a summary setting out the particulars referred to in paragraphs (a), (&), (<')5 (<0> (o)j (p), er)art- 1- The application for Letters Patent must be by a mental in- formal petition, dulv executed, with at least two signa- stnictions. ^ . . , tures on the page containing the prayer. 2. There must be at least five petitioners. 3. There must be a memorandum of agreement, in duplicate, duly executed under seal by at least the five petitioners with, at least, two signatures on the page or sheet containing the undertaking. INCORPOKATION OF COMPANIES WITH SHARE CAPITAL. 579 An agreement made up of two sheets of paper, the Sect. 5. one setting forth the undertaking itself, and the otlier jj^y.jj:^^ carrying all the signatures by themselves, will not be mental m- ' ,-, structions. accepted. Such agreement should conform, in its essential features, to the form contained in the sciiedule to The Ontario Companies Act. 4. The petition, which may be submitted at any time without Gazette notice, must state: (a) The proposed name of the company. Such proposed name must not contain the words ' ' Loan, " " Mortgage, " " Trust" ' ' Invest- ment" or "Guarantee" in combination or con- nection with any of the words "Corporation," "Com])any," "Association" or "Society" or in combination or connection with any similar collective term, nor the word "Imperial" or other title signifying Royal or Government sup- port or patronage, such as "Crown" "King's" "Queen's," etc., unless there is some real Im- perial Crown connection which gives a well- , founded claim to recognition, and unless it can be shown on clear evidence that there is a long and bona fide user, and that the name is so used as not to convey any suggestion of (roveniniciit support or patronage. It is the policy of the l)('i)artment not to grant names of which the words "Merger" "Amalga- mated," "Extension," etc., form a part, unless sufficient evidence is filed to show that tlu' iiii«l<'i-- taking of the ])roposed company is a Iton.i rule incj'gci-, amalgani.l1 ion or extension or as the case may be. Evidence must be filed llial tlic n.inic is nol objectionable upon any |)nblic ground and is not tluit of any kncnvn corporation oi- association incoi'))orat('d or unincoritor.-itcd, or ol" an> pari iK'i'sliip Ol" ot" any indiyidual, or any nanic under which any known business is being can-ied (.n. or so nearly resembling the same as to be cjilcu- latcd to deceive; 580 ONTARIO COMPANIES ACT. Sect. 5. If the proposed corporate iiaiiic is that of an Dopart^ existing linn or partnership whose undertaking '"''H^-i.' '"■ is to be taken over by the company a consent to foiinoorpo- the use of the name, signed by all the members ei)art- ,. , t^ »i'ii j.ii' *. ni.M.tai in- vatc ' ' bctorc the word * ' company withont settino- ont S-lm-o?iHv the special conditions therein. nitioii with 9_ rjy^^^, faets in the petition contained must be veri- share capital. ^^^ by affidavit to be made by one of the applicants. Snch affidavit should also state that each petitioner signing the petition is of the full age of twenty-one. 10. Signatures to the Memorandum of Agreement and Stock Books and petition must be verified by statu- tory declaration or affidavit of subscribing witness or witnesses. 11. Signatures should be the ordinary business sig- natures of the applicants and must be witnessed and proved by persons who are not petitioners or directly interested in the formation of the company. 12. Signatures by attorney must be made under a specific and general power, duly executed and verified. 13. Application forms can be obtained upon appli- cation to the Department of the Honourable the Pro- vincial Secretary. Public Utility Companies. Companies coming within the application of Part XII of The Ontario Companies Act are required to file, in addition to the foregoing, the following material : {a) Evidence that the proposed capital is sufficient to carry out the objects for which the company is to be incorporated; that such capital has been subscribed or underwritten and that the appli- cants are likely to command public trust and confidence in the undertaking; Such evidence should be in the form of an affi- davit or statutory declaration. (5) A detailed description of tlie plant, works and intended operations of the company, and an esti- mate of their cost. This description should be duly verified and in the case of telephone companies should state the number of instruments and poles, miles of wire, etc. IISrCORPORATION OF COMPANIES WITH SHAEE CAPITAL. 583 A rough sketch showing the proposed opera- Sect. 5. tion of the company should also be submitted. " (c) A copy of the by-laws of every municipality in which the company proposes to operate, duly certified by the Clerk of the Municipality under the corporate seal. {d) If the undertaking is to be carried on, or in so far as it is to be carried on, in territory without municipal organization, a report from the Min- ister of Lands, Forests and Mines approving of the undertaking, (e) If it is proposed that the company shall acquire any plant, works, undertaking, good-will, con- tract or other property or assets, a detailed statement of the nature and value thereof. This statement should be duly verified. Telephone Companies must also submit evidence Telephone that the municipal by-laws have been approved companies. by the Ontario Railway and Municipal Board. Powers of a telephone company are expressed in set terms, a copy of which will l)e supplied on request. It is suggested that the par value of the shares of a telephone company be fixed at a small amount, i.e., $5 or $10, as The Ontario Telephone Act reads that every member or partner of a company, association or partnership which is afterwards incorporated under the Ontario Companies Act shall have allotted to hini siiares in the new corporation to the value of his shar<' or interest in the company, association or pai-t- nership at the date upon which the charter of incorporation is granted. 1 f the interests of tlie different members of the association vary it might not be possible to observe this provision if tlie i);ir v;ilne is fixed at a large amount. Co-operative Com panics. Where a companv desires to be incorporated nndcr the provisions of Part XU of the Ontario Companies Act, the word ''co-operative" must form ])ar1 ol l!ie 584 ONTARIO COMPANIES ACT. Sect. 6. name and in addition to the material required in an application for the incorporation of a company, as set out herein, it will be necessary to submit the [)roposed general by-laws of the corporation to conform to the provisions of Part Xla of the Act. The Letters Patent of a co-operative company will contain a stereotype form of provisions, a copy of which will be supplied on request. 6. Subject matter : — (1) Incorporation without share capital. (2) Contents of petition. (3) Memorandum of Agreement. (4) Form of. See Dominion Act, s. 7A, which only applies to as- sociations with the objects specified. The following- are the Departmental instructions : Incorporation without Share Capital. Depart- 1. The application for Letters Patent must be by a ^ructions, formal petition, duly executed, with at least two signa- tures on the page containing the prayer. 2. There must be at least five petitioners. 3. The petition, which may be submitted at any time without Gazette notice, must state : (a) The proposed name of the corporation. Evidence must be filed that the name is not objectionable upon any public ground and is not that of any known corporation or association incorporated or unincorporated, or of any part- nership or of any individual, or any name under which any known business is being carried on, or so nearly resembling the same as to be calcu- lated to deceive. If the proposed corporate name is that of an existing association whose undertaking is to be taken over by the corporation, a consent to the use of the name, signed by all the members of the association, with the execution thereof veri- fied by the affidavit or statutory declaration of a subscribing witness, and an affidavit or declara- INCOKPORATIOX OF COMPANIES WITHOUT SHARE CAPITAL. 585 tion that the signatories comprise all the mem- Sect. 6. bers of the association, should be filed. If the proposed corporate name is that of an association incorporated under the Ontario Companies Act, a by-law of such association authorizing the application and undertaking that the Letters Patent of the existing associa- tion will be surrendered forthwith, must be filed. If the name of the proposed corporation in- cludes that of an individual, a verified consent of that individual should accompany the applica- tion. (h) The objects for which the corporation is to be incorporated. (c) The place mthin Ontario where the Head Office of the corporation is to be situate. If tlie Head Office of the corporation is to be situate in a township or district, the post office address of the corporation should also be given. (d) The name in full, the place of residence and the calling of each of the applicants. The word "Clerk" nmst not be used except to describe a clerk in Holy Orders, the I>epartment of the Honourable the Attorney-General having ruled that the word may be used for this pur- pose only. (e) The names of the first directors of the corpora.- tion. (/) That no public or private interest will be pre- judicially affected by the incorporation, if such be the case. (g) That tlie corporation will be carried ou with- out tlie purpose of gain for its meml)ers, and that anv profits or other acci-elious to the cor- poration will be used in promoting its ()l)jects. 4. The facts in the petition contained must be veri- fied bv affidavit to be made by one of the applicants. Such 'afiidavit should also state tiiat each p.'titioner signing the petition is of tli<" full age of iwenty-oue. 5. The petition sliall be accompanied by a memo- randum of agreement, in triplicate, signed by the iwti- 58() Sect. 6. Uepart- luontal in- structions for incorpo- ration witli- oiit sliar(> • ■ai)ital. Effect of regulations in memor- andum. Change of name or term.s of application. ON TAIMO COMPANIES ACT. (ioiiers scttiiii;- out such regulations as may be deemed expedient I'or: (a) The ek^ctioii of members, trustees, directors and officers ; {b) Tlie holding- of meetings of members, trustees and directors; ((') The establishment of branches; (d) The payment of directors, trustees, officers and employees, and {e) The control and management of the affairs of the corporation. The memorandum shall be expressed in separate paragraphs numbered consecutively, and the appli- cants may adopt all or any of the provisions of the form contained in the schedule to the Ontario Com- panies Act, or may substitute others therefor. There is a short form of memorandum of agree- ment which provides for constitution by by-law. This is more elastic than a constitution set out in the Letters Patent, which can only be amended by Supplementary Letters Patent. A copy of the short form of memoran- dum of agreement can be obtained upon request. - 6. Signatures to the memorandum of agreement and petition must be verified by statutory declaration or affidavit of subscribing witness or witnesses. 7. Signatures should be the ordinary business sig- natures of the applicants and must be witnessed and proved by persons who are not petitioners or directly interested in the formation of the company. 8. Application forms can be obtained upon applica- tion to the Department of the Honourable the Pro- vincial Secretary. 7. \n so far as the Letters Patent and Supplementary Let- ters Patent do not exclude or modify the regulations in Form 4, those regulations shall, so far as practicable, be the regulations of a corporation not having share capital in the same manner and to the same extent as if they were contained in the Letters Patent or Supplementary Letters Patent. 2 Geo. V. c. 31, s. 7; 3-4 Geo. V. c. 18, s. 33 "(I)- 8. The Lieutenant-Governor on an application for Letters Patent or Supplementary J^etters Patent may give to the cor- poration a namo difTeront from tts proposed or existing name, CHANGE OF NAME OR TERMS OF APPLICATION. 587 as the case may be, and may vary the objects or other provisiohs Sect. 8. or terms stated in the petition or memorandum of agreement. 2 Geo. V. c. 31, s. 8; 3-4 Geo. V. c. 18, s. 33 (2). As to cliange of name see Dominion Act, ss. 12, 21. The above section also provides that the Lieuten- ant-Governor may vary the objects or otlier provisions or terms stated in the petition or memorandum of agreement. The Department frequently refuses to cause letters patent to be issued in the terms of the application where the latter contains objectionable pro- visions, and in the case of certain corporations, r.//., clubs incorporated under the Act, certain restrictive clauses are invariably inserted in the Letters Patent whether they appear in the application or not. 9. A corporation without share capital heretofore or here- Creation of after incorporated, with the consent in writing of all its mem- capital of ,11 -IP ji 1- e -J- 1 1- "J 1 corporation bers, may by by-law provide for the creation ot a capital dnideU ,jot already into shares and for the allotment and payment of such shares iiaving share and may fix and prescribe the rights and privileges of the capital. shareholders; but no such by-law shall take effect until confirmed by Letters Patent or by Supplementary Letters Patent. 2 Geo. V. c. 31, s. 9; 3-4 Geo. V. c. 18, s. 33 (3). See Dominion Act, s. 7A, under which, however, the procedure is different. It should be noted that the consent in writing of all the members is required and that the by-law is ineffective until confirmed by Letters Patent or Supplementary Letters Patent. 10. — (1) Any two or more corporations to which this Act Ainalpamn- applics having the same or similar objects within the sco|)C of this p,',rl,ti(,us_'" Act, may, in the manner herein provided, amalgamate and may enter into all contracts and agreements necessary to such amalgamation. 2 Geo. V. c. 31, s. 10 (1). (2) The corijoration proposing to amnlgamate may enter Joint agree- into a joint agreement for the amalgamalion jtrcscriiiing the ["''",,„ terms and conditions thereof, the mode of carrying .the same (lirectors into cfr.Tl. and .stating the name of the new corporation, th(- i;;;;;y,'^';||;«^';j; names, caljings, and phucs of residence of the lirst direclors ,.t,.. thereof^ and how and when the sul)s<;(|nenl directors shall be elected, with such other details as may he necessary to perfect the amalgamation and tf) provide for the subsequent manacro- ment and working of the new corporation, and in cases of com- panies the numlter oT .lunr.- mT Hi,. «;iiiil;il, the p;ir value of 588 ONTARIO COMPANIES ACT. Sect. 10. each share, niul tlu" iiinniu'r oL' coiivcrlinijj llio sliare capital of oacli of the companies into that of the new coinpanv. 2 Ceo. V. e. 31. s. 10 (2) ; 3-4 Geo. V.. c. 18, s. 33 (4). Submissiou ^3) The agreement shall he suhmitted to the shareholders fuiulerror o^" iiie»i'Jtn-s of each of the eorpoi'ations at a general meeting members of thereof called for the pur]X)se of taking the same into con- eacbeor- sideration. poration. Considera- (4) At such meetings of shareholders or members \he. tionof agreement shall he considered, and if two-thirds of the votes '' ufccrtffi- °^ '^^^ ^^'*^ shareholders or members of each of such corporations cate'^of ' are for the adoption of the agreement that fact shall be certified adoption. 11^,011 the agreement by the secretary of each of such corporations under the corporate seal thereof. Petition for (5) Thereupon the several corporations by their joint peti- coniirmatiou tion may apply to the Lieutenant-Governor for Letters Patent ^atent^"^^ confirminig the agreement, and on and from the date of the ^^ ^" ' Letters Patent the corporations shall be deemed and taken. to be amalgamated and to form one corporation by the name in the Tjetters Patent provided, and the corporation so incorporated shall possess all the property, rights, privileges and franchises and be subject to all the liabilities, contracts, disabilities and duties of each of the corporations so amalgamated. 2 Geo. V. c. 31, s. 10 (3-5). There is no corresponding provision in the Domin- ion Act, Part I. Amalgamation. Amaigama- A perfect amalgamation, or what is intended to be el*^sentiais of. accomplished by such an operation, when thoroughly carried out in all its details, and as regards all the par- ties concerned, involves the following process: (1) A transfer of the corporate entity with its franchises, capacities and powers to another corpora- tion. (2) A transfer of the corporate assets, rights and liabilities present or contingent to such other corpora- tion. (3) A transmutation of the members of the former corporation into members of the latter. (4) A novation of the rights of the creditors of the former corporation so that their rights and claims against it are gone and instead the latter corporation is their debtor. Brice, 3rd ed., p. 517. AMALGAMATION, 589 But the word "amalgamation" is employed indis- Sect. 10. criminately to describe different operations such as (1) The transfer of all or some parts of the assets and liabilities of one or more than one existing- com- pany to another existing company, of which all the members of the transferring company or companies become, or have the right of becoming members. (2) The transfer of all or some part of the assets and liabilities of two or more existing companies to a new company, of which all the members of the transfer- ring company or companies become, or have the right to become members. It is only by, or in pursuance of legislative author- ity that the corporate entity of one corporation can be transferred to and vested in another, or that the mem- bers of one corporation can be transmuted into and made members of another, and therefore amalgama- tion, as meaning or including such results, in the ab- sence of such authority, is impossible; nevertheless the substance of what is desired to be done in such cases can by proper arrangements and proceedings be accomplished indirectly; and it is -these operations, with their results, which are now usually meant by the term amalgamation. An amalgamation in this sense, entails the follow- ing proceedings : (1) The transfer of the undertaking, assets, rights Procoodings and liabilities of the one company to another company ; nation. it may be one already in existence, or as is more often the case, it may be a new company created for the ex- press purpose of acquiring or taking over the under- taking of the company becoming defunct. (2) A wjiidiiig-uij for the transferring and distri- bution of its assets (now represented by cash or frc queiitly shares or debentures ol" the ac(iuiring com- pany) among tlie persons entitled in respect of the transferring comi)any. (3) An indemnity l)y the M('(|niring company to the transferring comi)any against its liabilities and ohliga tions. 590 ONTARIO COMPANIES ACT. Sect. 10. Hero there is no pretence of any transfer ol' tlie cor- porate entity, altliongli llie jjractical result frequently is very nmcli the same, by reason, anion*>st other things, that i)rovision is generally made enabling the acquiring company to sue for claims, defend actions, etc., in the name of the transferring company. Nor is there any pretence of a transmutation of the members of the transferring company into members of the ac- quiring company, although here again very frequently the amalgamation is with a view to this, and provisions are made enabling the shareholders in the old sompany to become shareholders in the new company, and in- directly a considerable amount of pressure is put upon them to induce them to do so. Brice, 3rd ed., p. 518. Amalgamation May be Effected: How (1) By sjiecial Act of a Provincial Legislature or *" ^^ ■ of the Parliament of Canada; (2) Under the provisions of section 10 and similar sections ; (3) Under the winding-up provisions of the On- tario Companies Act, s. 184, and under the correspond- ing sections of the Voluntary Winding-up Acts obtain- ing in the other jurisdictions. Section 184 of the Ontario Companies Act is almost identical with s. 161 of the Imperial Companies Act, 1862. Under it there are two modes of effecting an amalgamation : (a) Company A and Company B desire to amalga- mate. Company A passes a special resolution to wind up, appointing a liquidator and directing him to sell the assets to Company B in consid- eration of shares in that company to be allotted to the members of Company A. The liquidators act accordingly, and Company A is then dis- solved. (h) Comjjany A and Company B desire to amalga- mate. Company C is formed to acquire tlieir assets and liabilities and to carry on the amal- gamated Imsiiiess. Each of the old companies AMALGAMATION. 591 then passes a special resolution as in the last Sect. 10. case, the liquidators carry the sale into effect and the old companies are then dissolved. See Palmer's Company Precedents (1912), Part I, p. 1483. (4) Under a power in the charter to sell the under- taking for shares in another company combined with a power to divide assets in specie. (5) Where the number of shareholders is small and they all concur in the proposed amalgamation, such amalgamation may be effected by agreement signed by all shareholders, and by the company providing for the sale of. the undertaking for shares in a new com- pany; for the distribution of such shares among the shareholders of the old company; and providing also for the surrender to the new company or to a trustee for it of the shares in the old company. This last is the method which has hitherto been isuai most usually employed in Canada, and so far as the '"^ writers are aware without any serious difficulty having arisen from its emplojanent, though theoretically it is not so exact or accurate as the other methods. The first step in an amalgamation of this kind is the arrangement of terms upon which the amalgamation is to take place. These must include the nature of the consideration, whether it is to consist of cash or shares, or partly of each, and wlictlicr the shares are to be fully or partly paid Uj). Tliest' terms, wlien agreed on, should be embodied in a conditional agreement. Notice of the arrangement and tlie t(>rins agreed upon are then given to the sliai'cliolders of the amalga- mating companies, and special meetings are called to pass resolutions approving of the agreement and ex- pressly authorizing the directors to execute and carrx into effect, tlie formal agreement. Tlie t'oi-inal agree- ments with the purchasing conii)any ai-e then executed and the assets and niidertaking of the amalgamating company transferred to the imrcliasing company. The notices calling special general meetings of tlie amalgamating com|)anies to ratify the proxisional 592 ONTAKIO COMPANIES ACT. Sect. 10. Amalgama- tion. agreements should be made full and explicit. It is also advisable to accompany them with a circular shewing the nature of the ari'angement provisionally adopted, and it is sometimes well to add the advantages which will be derived from its adoption, and the reasons which led up to it. An important question which arises on an amalga- mation is whether the debts of the amalgamating com- pany are to be borne by the purchasing company or not. The purchasing company may not wish to assume obligations which are more or less indefinite, but may prefer to purchase the assets for a fixed sum; on the other hand the shareholders of the amalgamating com- pany are more likely to ratify the arrangement if they have an exact knowledge of how many shares of stock in the new company will be received by their amalga- mating company. It is usual, however, for the pur- chasing company to assume all the liabilities of the amalgamating company. Decisions. Decisions. There are very few reported Canadian decisions on questions arising out of amalgamation. In Pratt v. The Consolidated Electric Co. (1894) 34 N. B. 23, the defendant Electric Company took over by agreement the property of three other companies subject to certain outstanding bonds. The bonds of the defen- dant company were issued to retire the bonds of the other companies, and by this means all the outstand- ing bonds were retired except $26,000 and $(),000 of two of the companies respectively. The holders of these bonds contended that the bonds retired by the defendant company had been paid and cancelled by such retirement, and that these bonds should be paid in full out of the funds in Court; but. Held, that the redemption of the bonds by the Con- solidated Electric Co., by the issue and substitution therefor of bonds of its own did not operate as a pay- ment of the bonds so redeemed, but that the bonds so AMALGAMATION. 593 redeemed continued to be subsisting securities and Sect. 10. entitled to share in the fund in Court proportionately with the bonds not so redeemed, namely, the $26,000 and $6,000 of the Saint John City Railway Company, and of the New Brunswick Electric Company, respec- tively. See also Re Standard Fire Insurance Company; Kelly's Case, 12 A. E. 486; Nclles v. Ontario Invest- ment Association, 17 0. R. 129; Cayley v. Cohourg, etc., R. Co., 14 Gr. 571. The following cases may be referred to on the Decisions. meaning of ''amalgamation": The Indemnity Case, Albert Arbitration; Riley, at p. 17; Stace & Worth's Case, L. R. 4 Ch. 682; Era Case, 32 L. J. Ch. 207; Wynne's Case, L. R. 8 Ch. 1002; Anglo- Austrian v. British, etc., Co., 3 Giff. 521, 4 De G. F. & J. 341 ; G. W. R. Co. V. Commers, [1894] 1 Q. B. 507. As to appointment of directors of selling company to be directors of purchasing company, see Stace S Worth's Case, L. R. 4 Ch. 685, and James v. Eve, L. R. 6 H. L. 385. As to compensation of officers of selling company : Southall V. British Life Assurance Society, L. R. 6 Ch. 614. • Notice of meeting must be explicit: Imperial Bank of China v. Bank of Hindustan, L. R. 6 Eq. 91; Fox's Case, L. R. 6 Ch. 176. Objects of purchasing company may bo more exten- sive than tliose of selling company : Southall v. British Life Assurance Society, L. R. 11 Eq. 65. Invalid agreement: Clinch v. Financial Corpora- tion, L. R. 4 Ch. 117. Sale for partly paid up sliares valid : hi re Cilg an'l County Investfnent Co., 13 Ch. 1). 475; Imperial M( r cantile Credit Association, L. R. 12 Eq. 504; Hester (0 Company, 44 L. J. Ch. 757 ; Postlcthwaitc v. Port Plnlip Company, 43 Ch. D. 452. Reconstruction. Closely related 1«i tlie subject (»!' niiinlgamation ol' uecon- joint stock coinp.inies is the subject of rrcrmstructioji "^ruction. N D.C.A.- .'»8 r)94 ONTAEIO COMPANIES ACT. Sect. 10. Reconstruction dilTers from anials>'ani;itioii in liiai it Reconstruct relates only to one single company, whereas anialga- tion. mation involves more than one company. Speaking generally the reconstruction of a company may l;econie desirable or necessary in. order that it may have con- ferred upon it other or wider powers eitlier for the carrying on of its business or for the issue of prefer- ence shares or bonds or for the purpose of reducing its capital; or for the purpose of obtaining additional funds for the carrying on of its business. The method of reconstruction is by the formation or organization of a new company and a transfer to it of the undertaking of the old company. This is to be carried out substantiallv in the same way and mav he carried out by the various methods indicated in connec- tion with amalgamation of companies. For forms and suggestions with respect to recon- struction, the reader is referred to Palmer's Company Precedents, 12th ed., Part I, pp. 1431 ff. The following are the Departmental instructions for amalgamation : Amalgamation. Depart- 1. Any two or more corporations to which this Act S?uetJons. applies having the same or similar objects within the scope of the Ontario Companies Act may amalgamate and may enter into all contracts and agreements neces- sary to such amalgamation. 2. The application for Letters Patent confirm- ing a joint agreement for the amalgamation of two or more corporations must be by a formal petition of the corporations proposing to amalgamate, duly executed. 3. The petition must state : (a) The name of each of the petitioners in each case, giving the date of incorporation, the amount of capital, the number of shares and the amount of each share. (b) That each of the said petitioners is a subsisting company and carrying on business for the pur- pose for which it was organized. AMALGAMATION. 595 (c) That an agreement was entered into oy the said Sect. 10. petitioners, providing for the amalgamation. The date of such agreement should be given. ((/) The objects of the new corporation. (e) The proposed name of the new corporation. Evidence must be filed that the name is not objectionable upon any public ground and is not that of any known corporation or association, incorporated or unincorporated, or of any part- nership or of any individual, or any name under which any known l)usiness is being carried on, or so nearly resembling the same as to l)e calcu- lated to deceive. (/) The amount of capital of the new corporation, the numlx'r of shares and the amount of each share. ig) The place within Ontario where tlie head office of the corporation is to be situate. If the head office of the corporation is to l)e situate in a township or district the post office address of the corporation should also be given. (// ) The name in full, the place of residence and the calling of each of the first directors of the new corporation. The word ''clerk" must not be used except to describe a clerk in holy orders, the Dei)artment of the Honourable the Altorney-General having ruled that the word may be used for this ])nr- pose only. (0 That no i)ul)li(' oi- private interest will h<' i»i(>- iudiciallv affected bv the amalgamalioii of 1 he |»('t itioiiei's. 4. If the ijetitioners desire the insertion of special clauses in the Letters Patent such special clauses mnst be set oil! ill the petition. 5. ''J'lie petition should be dated and signed l>\ llie executive officers of each of the ])etitionei-s, iindei- llieir corporate seals. 6. The signatures to the petition and the iin|)i«s sion of the seals must be verified \)\ aflidaxil <>r stain r)9t) O.NTAKIO COMPANIES ACT. Sect. 10. tory declaration of the siil)scribiiii>' witness or wit- "" nesses. Depart- 7. The allegations in the petition contained shonld '?""^H.l?J h^^ verilied bv affidavit or statutory declaration of the for amaiga- exccutivc officers of cach of the petitioners. inatiou. 8. With the petition the following should be filed: {a) Duplicate original agreement entered into. Such agreement should prescribe the terms and conditions of the amalgamation, the mode of carrying the same iiito effect, and state the name of the new corporation, the names, callings and places of residence of the first directors thereof and how and when tlie subsequent directors shall be elected, with such other details as may be necessary to perfect the amalgamation and to provide for the subsequent management and w^orking of the new corporation, and in cases of companies the number of shares of the capital, the par value of each share and the manner of converting the share capital of each of the com- panies into that of the new company. The fact that two-thirds of the votes of all the shareholders or members of each of the petition- ers are for the adoption of the agreement should be certified upon the agreement by the secretary of each of the petitioners under the corporate seal thereof. (b) A statutory declaration or affidavit of the secretary of each of the petitioners that the agreement providing for the amalgamation has been lawfully passed by the directors and con- firmed by a vote of the shareholders, present or represented by proxy at "a general meeting duly called for considering the same by notice speci- fying the terms of the agreement to be confirmed and holding not less than two-thirds of the issued capital stock represented at such meeting, or, in the case of a corporation not having share capital, by a vote of two-thirds of the members so present or represented, as the case may be. AM.U.GAMATIOX. 597 (c) A certified copy of the proceedings at the meet- Sect. 10. ing of shareholders or members of each of the petitioners with respect to the sanction of the agreement. (d) A certified extract from the general by-laws of each of the petitioners as to the calling of such meeting of shareholders or members. (e) A certified copy of the notice mailed or copy of advertisement in the Ontario Gazette or the local paper of the holding of such shareholders' or members ' meeting in each case. 'O 11. Subject matter: — Ee-incorporation of corporation. See Dominion Act, s. 14. See Smith v. Ilumhervale Cemetery Co. (1915), 33 0. L. R. 452. 12. Subject matter : — Extension of power? on re-incorporation. See Dominion Act, s. 15. 13. Subject matter : — Rights of creditors preserved. See Dominion Act, s. 14, sub-sec. 4. See Smith v. Hurubervale Cemetery Co. (1915), 33 0. L. R. 452. 14. Siiitjcci matter : — Conversion of private company into a pul)lie company — (a) Kesolution therefor; (//) Filing statement, etc. See Dominion Act, s. 43C (4). 15. — (J ) W licie a coii^iiation lias ceased to carry on Inisi- Distribution ness except for the pnrj»ose of wiiuling up its afTairs and has "f "^sf'** "" no debts or ol)Iiga1ions that have not been ])rovide(l for or pi'"- oUrry^on " tected, the directors niay pass by-laws for disiribiiting the assets business, of the corporation or any part of them among the shaicliohlers. Distiihntion And in any case whore the corporation has issued both prefer- of «sH«'ts ence and common shares, sucli by-laws may jirovide for distri- |j,"|jppgnj. buting any part of the assets, in specie or otherwise, rateably rinsses of among the holders of preference shares, and the remainder of i''"^''*' such assets rateably among the holders of common shares. 598 ONTARIO COMPANIES ACT. Sect. 15. Conditions. Oontirina- tiou of by-law for distribntion. Supplemen- tary letters patent for certain pur- poses. Varying capital stock. Re-dividing shares. Varying pow ers. Varying borrowing powers. Amending charter. Making other provisions- Confirming by-law. (■>?) Tlu' l>_v-l;i\v An\\\ not take I'lTcct iiiiless or until it is wnfirmod bv a two-thirds vote of Iho shaivhoJders present, in person or by proxy, at a general meeting duly called for con- sidering the same and l\v the Tjiou1(Miant-(!ov(M'nor in ronncil. '2 Geo. V. c. ;U, s. 15. (3) Wlien so confirmed any such l)y-la\v shall he valid and binding upon all shareholders of the corporation. The above section was considered in Craivford v. Bathurst Land, dc, Co. (1916), 37 0. L. R. 611 ; (1918) 42 0. L. R. 256. 16. — (1) The Directors of a corporation may pass a by-law authorizing an application to the Lieutenant-Governor for the issue of Supplementary Letters Patent providing for — (ft) Increasing or decreasing the capital; See Dominion Act, ss. 52, 53, 54-57. (6) Ee-dividing the capital of tlie coi-poration into shares of smaller or larger amount; See Dominion Act, s. 51. (c) Limiting the powers of the corporation or extending them to such objects within the scope of this Act as the corporation may desire; See Dominion Act, s. 34. {d) Limiting or increasing the amount which the corpora- tion may borrow upon debentures or otherwise; (e) Varying any provision contained in the special Act or Letters Patent or Supplementary Letters Patent, where such amount is specified in the Letters Patent or Supplementary Letters Patent of the corporation ; (/) Any other matter or thing in respect of which provi- sion might have been made had the corporation been incorporated under this Act. 2 Geo. Y. c. 31, s. 16 (1). (2) The application shall not be made until the by-law has been confirmed, in the case of a company, by a vote of the shareholders present or represented by proxy, at a general meeting duly called for considering the same, and holding not less than two-thirds of the issued capital stock represented at such meeting or, in the case of a corporation not having share capital, by a vote of two-thirds of the members so present or represented as the case may be. 2 Geo. V. c. 31, s. 16 (2) ; 3-4 Geo. V. c. 18, s. 33 (6). See Dominion Act, s. 34. SUPPLEMENTARY LETTERS PATENT. 599 (3) Tlie capital shall not be increased until ninety per Sect. 16. centum of the authorized capital has been subscribed and frfty ^ per centum paid tnereon. capital. See Dominion Act, s. 52. (4) On a reduction of the capital of a company the liability j^j„jj,.s ^f of shareholders to persons who at the time of such reduction creditors are creditors shall remain as though the reduction had not preserved, been made. 2 Geo. V. c. 31, s. 16 (3-4). See Dominion Act, s. 54 D. The following instructions are issued by the De- partment authorizing the procedure for obtaining supplementary letters patent. Supplementary Letters Patent. 1. Supplementary Letters Patent may be issued for Depart- the following purposes : mental iu- structions. (a) Increasing or decreasing the capital: The capital shall not be increased until ninety per centum of the authorized capital has been subscribed and fifty per centum paid thereon. On a reduction of the capital of a company the liability of shareholders to persons who at the time of such reduction are creditors shall remain as though the reduction had not been made. (b) Re-dividing the capital of the corporation into shares of smaller or larger amount ; (c) Limiting the powers of the corporation or ex- tending them to such objects within. the scope of this Act as the corporation may desire; (d) Limiting or increasing the amount which tlie corporation may borrow upon debentures or otherwise ; (e) Varying any provisions contained in the spe- cial Act or Letters Patent or Supplcmenlary Letters Patent, where such amount is specified in the Letters Patent or Sup|)lemontary Ijetters Patent of the corporation; ;ni;iiiy not immediately required in such manner as frr<-linrter. ing the same may, at any time, be declared to Ik- forfeited and may be revoked and made void by the Lientenant-(Jovcrnor in Council, on sutricient cau.-'e being shown, upon such conditions and subject to such provisions as' ho may deem |)roper. 2 Geo. V. c. 3l", ^. 2f). Sec the notes to Doniinioii Act, s. 27. G{){\ ONTAKIO rOlMPAXIKS ACT. Sect. 30. 30. — (1) Jf a corporation (>xercises its corporate ])o\vers -- - — -, — wiicn the miinber of its shareholders or inenihers is less than wkh'less ''^'" ^^^'^' ^'°^" '^ poriod ol' more than six months after the numher than five has been so rednced, every person who is a shareholder or mein- members \^^ ^j- ^Y\q corporation durin' the application for an mt'iitai in- ordcr accopting the surrender of the Let- r..r"Ii.t!iin- ters Patent of the corporation has been law- '"" ;:"'■" - f ullv passed by the directors and confirmed reiuler of i * . i i cimrtpr. by a vote oi the shareholders, present or re- presented by proxy at a general meeting duly called for considering the same by no- tice specifying the terms of the by-law to be confirmed, and holding not less than two- thirds of the issued capital stock repre- sented at such meeting, or, in the case of a corporation not having share capital, by a vote of two-thirds of the members so pres- ent or represented as the case may be. (b) A copy of such by-law, duly certified as such under the seal of the corporation ; (c) A certified copy of the proceedings at the meeting of shareholders or members with respect to the passage and sanction of the by-law ; (d) A certified extract from the general by- laws of the corporation as to the calling of the meeting of shareholders or members ; (e) A certified copy of the notice mailed or copy of advertisement in the Ontario Gazette or local paper of the holding of such share- holders' or members' meeting; (/) A verified statement of the affairs of the corporation; and • {g) The charter of the corporation, in order that it may ultimately have endorsed upon it the fact that its surrender has been ac- cepted by the Lieutenant-Governor,' and that it may be officially cancelled and de- posited in the office of the Deputy Provincial Rejiistrar. "t>^ Termination ^^' ^^^ corporate exi.stence of a corporation incorporated of existence otherwi.se than by Letter? Patent may he terminated by order of corpora- ^f ^^g Lieutenant-Governor \ipon petition therefor by such incorporated corporation under like circumstance.'?, in like manner and with by letters ]ike effect as a corporation incorporated by Letters Patent may patent. surrender its charter. 2 Ceo. \. c. 31, s.' 32. EEGULATIONS. 609 33. The Lieiitenaut- Governor in Council may make regnla- Sect. 33 tions with respect to : (a) The cases in which notice of application for Letters j^sula tions Patent or Supplementary Letters Patent must be Lieutenant- given ; Governor (6) The forms of Letters Patent, Supplementary Letters °"°^ ' Patent, notices and other instruments and docu- ments relating to applications and other proceed- ings; (c) Tlie form and manner of the giving of any notice required by this Act; (d) Such other matters as he may deem necessary or ex- pedient for carrying out the objects and provisions of this Act, and such regulations shall be published in the Ontario Gazette and shall be laid l^efore the Assembly forthwitli if the Assembly is then in session, and if not then in session within fifteen days after the opening of the next Session. 2 Geo. V. c. 31, s. 33. See Dominion Act, s. 25. PAHT IL NAME OF CORPORATION. 34. — (1) The corporate name of every company with share jjse of word capital sball have the word " Limited '' as the last word thereof. " Limited." (2) Where the company or any director, manager, officer idem, or employee thereof uses the name of the company, the word '■ Limited " shall appear as the last word thereof. (3) Stamping, writing, printing, or otherwise marking on having, goods, wares and merchandise of the company, or upon ])ackages containing the same shall not be deemed to l)e n use of the name within the pi-ovisions of this section. (4) Where the word " coinp.iiiy,"" '■(■lul),'' " '^^•''0<^'iiti<)ii " ^i^^^ ,■ or other er(uivalent word forms paii; of the name the word tion. "Limited " mav be ahbrcvintofl to '' Ltd.'' or " Ld." 2 Geo. V . c. 31, .<. 3 1 (1-dj. (5) If any [K'r.son or persons trade or carry on business.,, . o • r under any name or title of which " Limited "' is the last word, usImk word that f)erson or those persons shall, unless duly incor]>orat('d witli " !'""i"i''^■ affidaxil or slatutory declaration. (5. With the {x'titioii the coi'pofalion niiisl prodnce tiie following: (a) A statntory (k'clai'ation |)ro\iiig thai Ihc hy- law authorizing the aj)pli('ation for an Order changing tlie name of t Ik- coiiioial ion has Ix'cn lawfnlly passed liy Hh- diicclors and confirmed by a vote of the shai-choldci's, present or rejiresented 1)\- proxy at a gen- eral meeting duly called lor considering the same 1)\- notice .sjieciryinu- the terms of the (ill' ()\l'Ai;iO fO.Ml'AMKS ACT. Sect. 40. by-law to be coiilirniod, and holding not less - — ^ than two-thirds oi' tJie issued capital stock lufuhii in- represented at such meeting-, or, in the case f.VidKuis- ^^' ^ corporation not liaving share capital, i"ji "«»>''• bv a vote of two-thirds of the members so present or represented, as the case may be. (b) A copy of such by-law, duly certified as such under the seal of the corporation; (c) A certified copy of the proceedings at the meeting of shareholders or members with respect to the jiassage and sanction of the by-law ; (d) A certified extract from the general l)y-laws of the corporation as to the calling of the meeting of shareholders or members ; (e) A certified copy of the notice mailed or copy of advertisement in the Ontario Gazette or local paper of the holding of such share- holders' or members' meeting; and (/) Evidence of the solvency of the corporation, which must, consist of a sworn copy of the last balance sheet or other sufficient state- ment of the affairs of the corporation, pre- pared by some responsible person conver- sant with its business. The statement should with reasonable detail show the nature, character and value of the corporation's assets and character of its liabilities. If more than a month or so has elapsed since th§ preparation of the statement, the affi- davit or statutory declaration verifying its contents must, if such be the case, show that the position of the corporation has not materially changed since the statement was prepared. Nr.tioc of 41. Notice of the change of the name of a coi'poration shall change. be given by the Provincial Secretary by publication in the Ontario Gazeile. 2 Geo. V. c. 31, s. 39. Change not 42. The alteration of the name of a ■ corporation shall not to affect appgf.t its rights or obligations. 2 Geo. V. c. 31, s. 40. right.s or '^ " ^ obligations. gee Dominion Act, s. 23. MEETINGS OF COMPAXY. 613 PART III. Sect. 43. MEETINGS OF COMPANY. First Meetmg of Private Company, or of a Company tchich is not offering Shares, Debentures or Debenture Stocks to the Public for Subscription,. 43. — (1) The provisional directors of a private company First meet- or a company whicb docs not offer shares, del^cntiires or debcn- ing- ture stock to the public for subscription shall call a general meeting of the company to be held at a convenient place within six months from the date of the Letters Patent, for the purpose of electing directors, appointing auditors, sanctioning the by- laws of the company, and transacting such other business as may be necessary to enable the company to carry on its undertaking, and shall, at least ten days before the day on which such meet- ing is to be held, give notice of such meeting by registered letter Notice, addressed to each shareholder, setting out in detail the business to be transacted and matters to be considered thereat. (2) The provisional directors shall report to such meeting. Report at (a) The number of shares subscribed; first meeting. (b) The names of the subscribers; (c) The amount paid thereon; (d) All contracts entered into by or on behalf of the company ; (e) The amount of the preliminary expenses, and (/) A fi'nancial statement of the affairs of the company signed by the auditors, if any. (3) If the meeting is not called by the provisional direc- Slmrehold- tors as aforesaid any three or more shareholders may call the ^'^'^ "^"•^' ^"''" meeting. 2 Geo. V. c. 31, s. 41 ; 8 Geo. V. c. 20, s. 28. (As to statutory meeting of public companies, see section 117.) In the opinion of the authors tlio above section is directory only. The report, unlike tlie one jn-ovided for in s. 1 17, is not required to be sent out to the sliare- holders. GENEKAL :MERTING.s, 44. In default of other (;x]>ress jji^ovision m the Special N„tire of Act, the Tycttors Patent, or Supplementary Tjctters Patent mectinR. or by-laws of a company, notice of the time and place for hold- ing general meetings of every company, including the statu- tory meeting and the annual and special meetings, shall be given at least ten days previously thereto by registered letter (iU ONTARIO COMPANIES ACT. Sect. 44. lo oiK-h sluii-rlioKlor iil his last known aildii'ss, ami by an ad- vertisemcnt in a newspaper published at or as near as may be to the place where the company has its head otlice and to the chief place of business of the company if Hiese dilTei'. 'i Geo. V. c. 31, s. 4V. See Doiiiiiiioii Act, s. 88 (a) Annual meeting. Report to be sent share- holders. Balance sheet. Abstract of income and expenditure. Auditor's report. Further necessary information. Balance sheet to .show assets and liabili- ties. 45. — (1) The annual meeting of the .shareholders of the company shall be held at such time and ]ilace in each year as the Special Act, Letters Tatenty Supplementary Letters Patent or by-laws of the company may provide, and in default of any such provision, on the fonrth Wednesday in January in every year. See Dominion Act, s. 105. (2) The directors shall, at least seven days before the day on which the meeting is held, send by post to every shareholder a report containing (a) A balance sheet made up to date not more than three months before such annual meeting; (b) An abstract of income and expenditure for tlie financial period ending njvon the date of such balance sheet; (c) The report of the auditor or auditors; (d) Such further inXormation respecting the company's financial position as the Special Act, the letters Patent, Supplementary Letters Patent, oi- the l)y-]aws of the company may require; and the directors shall lay such report before the meeting. See Dominion Act, s. 105 (2). If it is desired the by-laws may provide that the report mentioned in sub- section (2) need not be sent to the shareholders (sub- sec. 4). (3) Every balance sheet shall be drawn up so as to dis- tinguish at least the following clas.ses of assets and liabilities, namely : (a) Cash; (b) Debts owing to the company from its customers; (c) Debts owing to the company from its directors, oflficers and shareholders ; (d) Stock in trade; (e) Expenditures made on account of future business; (/) Land, buildings and plant; (g) Goodwill, franchises, patents and copyrights, trade- mark.s, leases, contracts and licenses; (h) Debts owing by the company secured by mortgage or other lien upon the property of the company; GENERAL MEETINGS. . 615 (i) Debts owing by the company but not secured; Sect. 45. (A-) Amount received on common shares; (I) Amount received on preferred shares; (m) Indirect and contingent liabilities. See Dominion Act, s. 105 (3), which requires certain particulars not set out in the above sub-section. (1) If the by-laws of the company so provide it shall not When re- be necessary to send the report mentioned in sub-section 3 to poi-t need the shareholders. 2 Geo. V. c. 31, s. 43. 46. — (1) Upon the receipt of a requisition in writing, signed ^^gral by the holders of not less than one-tenth of the subscribed shares meeting by of the company, setting out the objects of the proposed meeting, ('"'^'<;"t?i's ou the directors, or, if there is not a quorum in office, the remaining therefor, directors or director shall forthwith convene a special general meeting of the company for the ti-ansaction of tlie business mentioned in the requisition. See Dominion Act, s. 87. (2) If the meeting is not called and held within twenty-one ^y share- days from the date upon which the requisition was left at the hoklcrs. head office of the compan}^ any shareholders holding not less than one-tenth in value of the subscribed shares of the com- pany, whether they signed the requisition or not, may tliem- selves convene such special general meeting. (3) The directors may at any time, of their own motion, By call a special general meeting of the company lor the transac- directors, tion of any business. (4) Notice of any special general meeting shall state the Notice of l)usiness which is to be transacted at it. 2 Greo. V. c. 31, s. 44. 47. 'J'he president shall preside as chairman at every gen- Tresidiug oral meeting of the company, and if there is no president or •^'^I'^er. vice-presidenl. oi- if at any meeting neither of them is present within fifteen minutes after the time appointed for holding the ,^^]'"jp"[||Jj ^" meeting, the shareholders present shall choose one of their when necos- num})er to be chairman. 2 Geo. V. c. 31, s. 45. ^"'•^• 48. The chairman may, with the consent of the meeting iiiid Adjoum- subject to such conditions as tlie meeting may decide, adjourn ">»'iit by any meeting from time to time and from place to place. 2 Geo. ^'^"*'^' V. c. 31, s. 46. 49. — (1 ) ,\t any general meeting, unless a poll is demanded, propfdnro a declaration by the chairman that a rosoliitinn has been car- «« to ried, and an entry to that effect in the minutes of the company, shall be jiriina facie evidence of the fact without proof of ttie number or proportion of the votes rPCordoecial Act, Letters Patent or Supplementary Letters Patent. 2 Geo. V. c. 31, s. 50. See Dominion Act, ss. 105, 88 («). PART IV. SHARES, CALLS. Generally. 53. Xo shareholder of a co-operative cold storage company Limit of or association to which aid has been or may hereafter be f^^^P", granted under the provisions of any statute, or of a cheese and holding in butter maniifactui-ing company carried on on the co-operative certain plan, shall hold sliares to an amount exceeding $1,000. 'I Geo. ^'**^^- V. c. .31,. s. 51. 54.— (1) Every shareholder shall, witiiout payment, be en- ined in Canadian t-nrrcncy '|*^'|'i"|||l^"' may, at the option of the holder, be exchanged for .shares in HterlinR or pounds sterling, francs or marks. 2 Geo. V. c. 31, .s. 52 (3) ; '"'•""f''' '"• 3-4 Geo. V. c. IS, s. 33 (12). '"" " t;i> ONTARIO COMPANIES ACT. Sees. 54-58. Fixed value of shares so issued. Shares to include share war- rants. Lost certifi- cate. Restrictions on transfer. Liability where call remains unpaid. Refusal to ro^rister transfer whore shareholder indebted to corporation. (■4) For tlu' purpose of dividends, distribution of assets, \otinor and all other matters relating to the amount of shares issued in pounds sterling or francs or marks, one pound sterling or twontv-five francs or twenty marks shall be calculated as five dollars. 2 Geo. V. c. 31, s. 52 (4) ; 3-4 Geo. V. c. 18, s. 83 (13). (5) Shares shall include share warrants, where the com- pany is authorized to issue the same. 2 Geo. V. c. 31, s. 52 (5). 55. If a share certificate is defaced, lost or destroyed, it may be renewed on payment of such fee, if any, not exceeding twenty-five cents, and on such terms, if any, as to evidence and indemnity as the directors think fit. 2 Geo. V. c. 31, s. 53. 56. Subject matter : — (1) Shares personal estate. (2) Subject to section 58, no by-law shall be passed which in any way restricts the right of a holder of paid-up shares to transfer the same, but nothing in this section shall prevent the regulation of the mode of transfer thereof. 2 Geo. V. c. 31, s. 54. See Dominion Act, ss. 45, 64ff. 57. Subject matter : — (1) Directors' consent required where shares not paid up. See Dominion Act, s. 65. (2) Their liability, if they allow transfers to persons with- out means. See Dominion Act, s. 83. (3) Eelief from liability by entering protest. See Dominion Act, s. 83. (4) Where a share upon which a call is unpaid is ti'ans- ferred without the consent of the directors, the transferee shall be liable for the call to the same extent and with the same liability to forfeiture of the shares, if the call remains unpaid, as if he had been the holder when the call was made, and tlie transferor shall remain also liable for the call until it has been paid. 2 Geo. V. c. 31, s. 55. 58. Where the Letters ]*atent, Suppleuientary Letters Pa- tent or by-laws of a corporation confer that power on the direc- tors, they may decline to register a transfer of shares belonging to a shareholder who is indebted to the corporation. 2 Geo. V. c. 31, s. 56. See Dominion Act, s. 67. SHARES. 619 { _ 59. The directors, upon the passing of a by-law authorizing Sect. 53. the payment of a dividend upon shares, may direct that no -— : entry of transfers shall be made in the books of the company tmns°fr for a period of two weeks immediately preceding the payment books pend- of such dividend, and payment thereof shall be made to the ["^n'ofdivi- shareholders of record on the date of closing such books, dend. ? Geo. Y. c. 31, s. 57. 60. Subject matter : — Transfer valid only after entry. See Dominion Act, s. 64. 61. — (1) The directors may, for the purpose of notifying Transferor the person registered therein as owner of such shares, refuse to "^^^ ^^, allow the entry in any such books of a transfer of shares, and in that event shall forthwith give notice to the owner of the applica- tion for the entry of the transfer. (2) Such owner may lodge a caveat against the entry of the ^^J'^^r may transfer iand thereupon such transfer shall not be made for a ^.^^eat. period of forty-eight hours. (3) If, within one week from the giving of such notice or Transfer the expiration of the period of forty-eight hours, whichever shall ™^^^j.J^^ j^ last expire, no order of a competent court enjoining the entry uo order of such transfer shall have been served upon the company the served, transfer may be entered. (4) Where a transfer is entered after the proceedings men- Company not tioned in this section the company shall, in respect of the shares fo l^Jfl'^^^" so transferred, be free from liability to a person whose rights arc complied purported to be transferred, but without prejudice to any claim witli. wliich the transferor may have against the transferee. 2 Geo. ^^ c. 31, s. 59. The Dominion Act contains no similar provision. 62.— (1) The directors may call in and demand from the CallinR in shareholders the amount unpaid on shares by them subscribed instnlmouts. or hold, at such times and places and in sncli imyments or instal- ments as the S]X'cial Act, the Lctteis rateiit, Sui)p]einontary Letters Patent, this Act, or the by-laws of the company require or allow; and interest shall accrue u[»oti the amount of any unpaid call from the day appointed for payment of such call. (2) The demand shall state that in the event of Tionpaymcnt pomnnd to of .shares in respcd of uliich the call was made will lie ''"''''' j'.'j'/jj''^, 'j"' to be forfeited. forfeiMirc. (3) If, after the demand, any call is not paid within the time Forfeiture and in the manner provided by the Special Act, the Letters Pa- "f hI'^h's. tent. Supplementary Letters Patent or tlie by-law tlie directors, by resolution to that elTect recilinir tlie facts and duly recorded 6-20 Sect. 62. ONTARIO COMPANIES ACT. in thoir minuU's. niny suiuiiiai'ily forfeit iiny sIkucs whcroon smh i);iyiiKMit is not made; and the same shall tlu'reiipon he- c'omo the property of the eompany, and may be disposed of as, l)v bv-law 01- otlierwise, the eoinpany may ordain; l)nt such forfeiture sliall not relieve the shareholder of any liability to the company or 1o any creditor. 3 Geo. V. c 31, s. 60. See Dominion Act, ss. 58-63. Share Warrants. 63. Subjeit matter: — Issue of share warrants. See Dominion Act, s. 68A. How far holders of share war- rants to be deemed share- holders. 64. Subject matter: — Rights of holders. See Dominion Act, s. 68A2. 65. Snbject matter: — Surrender of share warrants. See Dominion Act, 68A3. 66. The bearer of a share warrant may, if the Letters Patent or Supplementary Letters Patent so provide, be deemed to be a shareholder of the company, either to the full extent or for such purposes as may he thereby prescribed, but he shall not be qualified, in respect of the shares specified in such warrant, to be a director where the by-laws of the company provide that a director must be the holder of a specified nuinl)er of shares. 2 Geo. V. c. 31, s. 64. Restrictions 67. Except as herein otherwise expressly provided no person shall, as a l)earer of a share warrant, sign a requisition for call- ing a meeting of the company, or attend, or vote, or exercise any other privilege of a shareholder at a meeting of the company, or be entitled to receive any notices from the company; but the bearer of a share warrant shall be entitled in all other respects to the same privileges and advanta.ges as if he were named in the register of shareholders as the holder of the .shares included in the warrant, and he shall be a shareholder of the company. 2 Geo. V. c. 31, s. 65. 68. Subject matter : — Entries on issue of share warrants. See Dominion Act, s. 68A5. Compliance 69. Until the warrant is surrendered the above particulars with s. 118. shall be deemed to be the particulars which are required by section 118 to be entered in the register of shareholders; and on the surrender of a warrant the date of such surrender shall on holders of share warrants. SHARE WARRAXTS. 621 be entered as if it were the date at which a person ceased to Sect. 69. be a shareholder. 2 Geo. Y. c. 31, ?. 67. See Dominion Act, s. 68A6. 70. — (1) The bearer of a share warrant may at any time j^xerdse of deposit the warrant at the office of the company, and so long privileges on as the warrant remains so deposited the- depositor shall ha^e fj'j^^,?^"' the same right of signing a requisition for calling a meeting wan-ants, of the company and of attending and voting and exercising the other privileges of a shareholder at any meeting, held after the expiration of two clear days from the time of deposit, as if his name were inserted in the register of sliareholders as the holder of the shares included in the deposited warrant, and the company shall, on two days' written notice, return the de- posited share warrant to the depositor. (2) Not more than one person shall be recognized as de- Conditions, positor of the share warrant. 2 Geo. V. c. 31, s. 68. See Dominion Act, s. 68A7. 71. The directors may make rules as to the terms on which Lost share a new share warrant or coupon may be issued in case of the ^varrant. defacement, loss or destruction of the original. 2 Geo. V. c. 31, s. 69. Liahility of Shareholders — Execution of Trusts. 72. Subject matter: — (1) Trnsts. (2) Sufficient discharge. (3) Application of money paid. See Dominion Act, s. 50. 73. Subject matter: — ( 1 ) Trustees, etc., and ]\Iortgagor may vote. Exceptions. See Dominion Act, s. 42, which differs from tlio On- tario section by omitting tlie provision that the i)erson wlio mortgages or hypotlioeates his sliai'cs loses liis riglit to vote if lie lias in tlie dociimcnl expressly em- powered the lioldei- of the mortgage or hypothecation to vote, (2) Subject to the l)y-laws, if shares are hehl jointly by j„j„, two or more persons any one of them present at a meeting may, liol'Ins of in the absence of the other or others, vote therwn, but if more**""' than one of them are pre.'^ent, or represented by proxy, they sliall vote together on tlie shares jointly held. 2 (ieo ^" -■ ^^ . ^ T1. Son Dominion Art, ss. 8R nnd SO {e). (i-_"J ONTARIO COMPANIES ACT. Sect. 73. Liability of beneticiary. beneficiary, etc., not named trustee, etc., liable. 74. Subj(-(l lUiUkT: — (1) Liability of sliarehoUlors. See Dominion Act, s. 39. (2) Set-otr. See Dominion Act, s. 40. 75. Subjoi't iiiaiter: — Shareliolders not liable beyond unpaid amount. See Dominion Act, s. 38. 76. Subject matter: — (1) Trustees not personally liable. (2) If tbe trust is for a living person not under disability such person shall also be liable as a shareholder. (3) If the testator, intestate, ward, lunatic or person so repre.sented is not named in the books of the company the exe- cutor, administrator, guardian, committee or trustee shall be personally liable in respect of such shares as if he held them in his own name as owner thereof. 2 Geo. V. c. 31, s. 74. See Dominion Act, s. 41. 77. Subject matter : — Person holding shares as collateral seturity not ix-rsonally liable prior to foreclosure. See Dominion Act, s. 41 (2), from which the Ontario section differs by expressly providing that the holder of shares as collateral security is personally liable thereon after foreclosure. PAET V. Borrowing by-law. PREFERENCE AND DEJiEXTUHE STOCK, DEBENTURES AND MORTGAGES. 78. Subject matter : — (1) By-laws for — (a) Borrowing money; (h) Issuing securities; (c) Disposing of securities. See Dominion Act, s, 69 (1) (a) (c). See also s. 82 (1) of this Act. It is advisable that the general borrow- ing by-law of the company should be passed in pursu- ance of and combine the wording of both sections 78 PEEFERENCE AND DEBEXTURE STOCK, ETC. 623 and 82. The by-law may be sanctioned by the consent in Sect. 78. writing of all the shareholders in lieu of confirmation^ at a general meeting : s. 144. The exercise of borrowing powers by all public com- panies, except those which do not offer shares, deben- tures or debenture stock to the public for subscription, is forbidden until the provisions of section 114 have been complied with. (2) By-laws for — (a) creating preference shares. See Dominion Act, s. 47. (6) The conversion of preference shares into common shares Conversion or debentures or debenture stock, debentures into ^'f preference debenture stock or preference shares, or any class of ' ' shares or securities into any other class. By-laws passed under both sub-sections (a) and (b), in addition to confirmation by the shareholders, by vote of the shareholders under s. 79 or consent in writ- ing under s. 144, may also require confirmation by sup- plementary letters patent as a pre-requisite to their validity wliere s. 80 (2) of the Act applies. Section 81 should also be noted, which requires the consent of the holders to red('ni})tion or conversion unless such re- demption or conversion was a term of the issue. (3) (m'||(|;iI powcis of borrowinp;- not nfforted. See Dominion Act, s. 69 (2). 79. No by-law foi- any of the purposes mentioned in the ('onfinuing next preceding section shall take effect until it has been con- '•y-Inw. firmed by a vote of sliarolioldcis present, nr represented by proxy and holding not less than two-thirds of the issued capilal stock represented at the meeting or by vote of two-thirds of the niombcrs so present or represented, as the case may be, at m general meeting diilv called for considering the same. 2 Geo. V. c. .T1, >. :;. See Dominion Act s. 69 as to confiniialioii of Ixn- rowing by-law, and s. 48 as to confirmation of profor- ence share by-law. Confirmntion by consent in wiit ing of nil the sliarcliolders or mh'IhIm-i's of tlic coriiorn- tioii is ;int lioi-izcd 1)\' s. 111. IJLl-i ON PAKIO COM I'A NIKS ACT. Sect. 80. 80.— (I) A bv-l;i\\ \'ov tlio c'lH^ation and issue of preference — -shares or tor the conwrsion of shares, dobcnturcs or deboiiture it;siu"of ^^^ stock into preference shares may provide that the holders of protVrence such shares shall have such preference as regards dividends shares. j^^^| repaynient on dissolution or winding-u}) as may be therein set out, and the right to select a stated proportion of the board of directors, or such other control over the affairs of the com- pany as nuiy be considered expedient; or may limit the right of the holders thereof to specific dividends or conti'ol of the affairs of the coni]iany or otherwise, not contrary to law or to this Act, and nuiy provide for the purchase or redemption of sucli shares Jjy the company as therein set out; but any term or provision of such by-law, whereby the rights of holders of such shares are limited or restricted, shall be fully set out in the cerlificate of such shares, and in the e\ent of such limitations and restrictions not being so set out they shall not be deemed to qualify the rights of holders thereof. See Dominion Act, s. 47. Rpstrir-tions The provision of the above section to the effect that to bo sot outincer- faikire to set out fully in the preference share certifi- tifi.ate. ^^^^ ^^^^ term or provision of the by-law whereby the rights of holders are limited or restricted, leads to con- siderable difficulty. Such terms or provisions are fre- quently long and elaborate, in which case it is submitted that setting out such terms and provisions in an ab- breviated form is a sufficient compliance with the section, provided that the disclosure of the limitations and restrictions in the certificate is complete and un- ambiguous. Setting out the restrictions on the back of the certificate, if they are referred to on the face, has been held to be a compliance with the section : Harrison v. Marshall (Meredith, C.J.C.P., March 4th, 1920, un- reported). When con- (2) No such by-law which has the effect of increasing or firmation by decreasing the capital of the company, or increasing the amount tary letters of the pi'eference stock authoi'ized by the special Act, fjetters patent re- Patent, Supplementary Letters Patent or any prior by-law of qui ret . ^j^^ company, or otherwise varying any term oi' provision thereof, .shall be valid or acted upon until confirmed by Supplementary Tetters Patent. 2 Geo. V. c. 31, s. 78; 6 Geo. V. c. 35, s. 4. See Dominion Act, s. 52 (2), as to confirmation of increase of capital by supplementary letters patent, and s. 54 as to similar confirmation of decrease of capi- tal. PREFERENCE AND DEBENTURE STOCK, ETC. 625 As to the meaning of the words "has the etfect of Sect. 80. . . . decreasing the capital," it is submitted that the by-hiw does not have such effect until a redemption or purchase of the shares takes place. It is, however, advisable to have a by-law to which the section may apply confirmed by supplementary letters patent as soon as possible. 81. Unless preference shares, debenture stock, debentures Consent^ of or bonds are issued subject to redemption or conversion the i-edemption. same shall not be subject to redemption or conversion without the consent of the holders. 2 Geo. ^^ c. 31, s. 70. 82. — (1) The directors may charge, hypotliecate, mortgage, Mortgages or pledge any or all of the real or personal property, including to^seeure^^^ book debts and unpaid calls, rights, powers, undertaking and gt^, franchises of the corporation to secure any bonds, debentures, debenture stock, or other securities, or any liability of the cor- poration. See Dominion Act, s. 69 (d), which is narrower in its terms than the above section. (2) A duplicate original of such charge, mortgage or other DupHcate instrument of hypothecation or pledge made to secure such bonds, debentures or debenture stock or other securities shnll be forthwith filed in the office of the Provincial Secretary as well as registered under the provisions of any other Act in that Registration, behalf. 2 Ceo. ^'. c. 31, s. 80. See Dominion Act, s. 69A, and the notes to ss. 69- 69M at pages 395-397. There is no penalty for default in filing a duplicate and probably the section is direc- tory only. Doubtless the words "other securities" arc to be read cjusdcm fjeneris. No c'xi)r<'ss provision is made for filing one of the debentures of a series where there is no covering trust deed. I'Airr VI. I)IWKr'ini!>^ \\h I Kill; rnwi:T!S, KTC 83. 'I'lir jHTsoiis Juimi'd ys jii<.\ i.^ioiiai (lircrmi^ in tlie First Speciiil Art or in the Ix-tlers I'alciit slinll be tlie dirertors of '"'••^•'o'""- the company until replaced by the saiiif uunibcr of others duly D.C.A. 40 ()-JG ONTARIO COMPANIES ACT. Sect. 83. When flei'tion to be held olce'tod in thoir stead liy the sharcholdors in ii:(,'iu'rnl nn'ctiiiL;-, which shall he hold not Ijitcf than six niontlis al'lor tho coming into force of tlie Special Act or the date of the Letters Patent, and they shall ho oligihlr for oloetion. 2 Geo. V. e. 31, s. 81 ; 6 Ceo. V. c. 35, s. 5. See Dominion Act, s. 73. The above section expressly states what the Domin- ion section implies, viz., that the provisional directors must be replaced by an equal number of permanent directors. The result of the provision is that stating in the petition the names of the provisional directors, as required by the Act, has the effect of fixing the number of the board, which can thereafter only be changed under s. 90. Furthermore, there must obviously bo petitioners equal in number to that of the board of per- manent directors proposed to be elected. 84. Snhject matter: — Board of directors. See Dominion Act, s. 72, and the notes to ss. 72, 74, 77 and 78. 85. (1) Except as in this section provided no business of a company shall be transacted by its directors unless at a meet- ing of directors at which a quorum of the board shall be present. See Dominion Act, s. 80 (e). (2) Unless otherwise provided by the Letters Patent or Supplementary Letters Patent a majority of the directors shall he necessary to constitiite a (juorum. See Dominion Act, s. 80 (e). If it is desired that less than a quorum be em- powered to act, an appropriate provision should be inserted in the petition for incorporation. (3) So long as a quorum of directors remains in office vaSes vacancies in the board may be filed by such directors as remain whUe there j,-^ ^f^^.^ IS a quorum. See Dominion Act, s. 78 (c). (4) Whenever there is not a quorum of directors in office meS it shall be the dutv of the remaining directors or director forth- when no with to call a meeting of the shareholders to fill the vacancies, quorum. ^^^-j -^ (\(.^au\t the meeting may be called by any shareholder. Business must be transacted by quorum of board. Majority to ciin.stitute quorum. DIRECTORS AXD THEIR POWERS, ETC. 627 (5) If there are no directors remaining in office a meeting Sect. 85. to elect directors may be called by any shareholder. 2 Geo. V. j^^^jj^— c. 31, s. 83. met' ting- See Dominion Act, s. 87. directors. 86. — (1) The shareholders of a company having more than Executive six directors may, by a resolntion .passed by a vote of those committee, present or represented by proxy and holding not less than two- thirds of the issued capital stock represented at a general meet- ing called for that purpose, authorize the directors to delegate any of their powers to an executive committee, consisting of not less than three, to be elected by the directors from their number. (3) A committoo .so formed shall, in the exercise of the Committee powers so delegated, conform to any regulation that may be Regulations imposed upon them by such resolution or by the directors. 2 Geo. Y. c. 31, s. 84. See Dominion Act, s. 80, notes at p. 485. The Act does not specify that the quorum of the executive com- mittee may be fixed. It is, however, submitted that this mav be done. 87. Subject matter : — Qualification of directors. See Dominion Act, s. 75. 88. Subject matter: — lOk'ction of directors — (a) Yearly. See Dominion Act, s. 78 (a). (h) By ballot. See Dominion Act, s. 78 (/>). (c) President, vice-president and olficors. See Doiiiiiiioii Act, s. 78 (d). 89. Siilijcct iiijittcr: — Failnre tf) clocl director.'* — how remedied. Sec l)(»iiiiiii(iii Act, s. 74. 80. Siibjeci iiiiitter: — (1) Change by l)y-law of niinil)cr of ((noruni of direetors or of heiid office in Ontario. See Dominion Act, s. 76 as to varyinu: inimluTs of directors and changes of location of head office. As ()ii8 ON rAI{lO COMPANIES ACT. Sect. 85. to lixiiig Uie quoruiii of the board, see Doiiiiiiiou Act, s. 80 {('). Uiuler the Ontario section there is no power to tix tlie quorum at less than a majority without the authority of letters patent or sui)plementary letters patent. See s. 85 (2), supra. Cliairinuu of ^la) A LOiiipniiy iii;iy liy hy l.iw |)i<)viilo Tor the cli'ctit)!! of ."hvi'ti^rs. ^ chairmjui of the Uoaid of Dirtctois, and define his duties and may assign to the ehaii'iiiaii of tlic I^oai'd of Directors any or all of the duties of the president oi' otlier officer of the com- pany as prescrihed hy this Act, and in that case tlie by-law shall fix and prescribe the duties of the president: (a) W lu!n a l)y-la\v lias been passed uu(k'r tlie provisions of this sub-section for the appointment of a chairman of the Board of Directors, this Act so far as it affects the company passing the by-law shall be read as if the chairman of the Board of Directors had been named in the Act instead of the president, so far as the by-law transfers or assigns the duties of the president to the chairman of the Board of Directors. 8 Geo. V. c. 20, s. 29. (2) Sul)ject matter :— By-law to be confirmed by shareholders. See Dominion Act, s. 76. Publication. (3) A copy of the by-law certified under th(i seal of the company shall be forthwith filed in the olfice of the Provincial Secretary and published in the Ontario. Gazette-; and, in case of the removal of the head office twice in a newspaper published in the place where the head office was located and also twice in a newspaper published in the place to which the head office is to be removed or as near i hereto as may be. 2 Geo, V. c. 21, s. 88. See Dominion Act s. 76. 91. Subject matter : — (1) By-laws, (ft) Shares. See Dominion Act, s. 80 (a). {})) Dividends. See Dominion Act, s. 80 (//). Directors' {r) The amount of the share fiualiffeat ion of the directors services, ajif] f}-,^ remuneration of the directors and of the etc President and Vice-President; See Dominion Act, s. 80 (c). DIRECTORS AND THEIR POWERS, ETC. 629 (d) The time at which and phice where the meetings of the Sect. 91. company shall be held ; the calling of meetings of ^ the company ; and the procedure in all things at ^^^^*^^"8s. such meetings; and except as provided by section 51 of the requirements as to proxies. See Dominion Act, s. 80 (d). (e) The conduct in all other particulars of the affairs of the \iiscel- conipany. laneous. See Dominion Act, s. 80 (r/). (2) Sul)jeet to the provisions of sub-section 3 every such Confirma- by-law and every repeal, amendment or re-enactment thereof tio»^"f ^v- unless in the meantime confirmed at a general meeting of the company duly called for that puirpose, shall have force only until the next annual meeting of the company ; and in default of confirmation thereat shall, at and from tluit time, cease to have force; and in that case no new by-law to the same or the like effect or re-enactment thereof shall have any force until confirmed at a general meeting of the company. See Dominion Act, s. 81. (3) The companv mav, either at a general meeting called By-laws may „ ; ', , ,1 "^ 1 i- 1 1 be varied, for that purpose or at the annual meeting, repeal, amend, vary or otherwise deal with any by-law passed by the directors, but no act done or I'ight acquired under any by-law shall be pre- judiciallv affected bv anv such repeal, amcndmout. variation or other dealing. 2 Geo. V. c. 31, s. 89. See Dominion Act, s. 81. 92. No by-law for the payment of the president or of any I'avments to director shall be valid or acted upon unless passed at a general J,','.'''^/j'rJ',![^j,..., meeting, or, if passed by the directors, until the same has been confirmed at a general meeting. 2 fJeo. V. c. 31, s. 00. See the notes to Dominion Act, s. 80, at pa^e 490. AVitli ro^-ard to the cases there cited, it should h<' oh- served in the above section that the bydaw may l)e y)ass('d in tlie first instance at ;i u-encrnl mccliii.u', in which event it does not require coiifiniialioii. Tn Br Solirifors (1918) 27 O. L. R. 147, !;')«, solici- tors were lield to be not entitled to be paid by tiicir clients for their services as directors of a compnny in the incorporation of which they were employed. iVAO ONTARIO COMPANIES ACT. Sect. 93. nirectors not to vote on contracts in whii-h thej' have a per- sonal inter- est, etc. No liability wliere interest clis- olosed and refrains from voting. Proviso Not to pur- chase shares of other cor- porations unless au- thorized by by-law. Not to apply to company dealing in shares. 93. -(1) Ni) (liri't'tor shall at any diivclors" niectiug vole in respect of any contracl or arrangenicnl made or proposed to be entered iiilo with the company in wliieli he is interested either as vendor, pnrcliasor or otherwise. "^ Cieo. V. o. 31, s. 91 (1) ; 3-4 Giii"el»ol(lers. by-law pas.sed by the directors and confirmed at a general meet- ing duly called for the purpose of considering the same by a vote of the shareholders present or represented by proxy and holding not less than two-thirds of the issued capital .stock ropre.'^ented at such meeting. (6) Where dividends have already been paid by such a y„ji,|it^^. „£ company in any of the cases mentioned in sub-section 2, the payments, payment thereof shall be deemed valid if a by-law adopting and apjjroving the same is passed by the directors and approved by vote of the shareholders in the manner mentioned in sub-.section 5. 3-4 Geo. Y. c. 18, s. 33 (15). Sub-sections (2), (3), (5) and (G) wore passed in 1913 as the result of an application by the autliors' firm for special legislation on belialf of a mining com- pany. Any dividends [laid by such conii)anies arising out of proceeds of the sale of ore would, strictly speak- ing, diminish the fixed capital. Tlie question of ilic legality of such dividends Mpfirt from sneh h'gislntion as above set out is discussed in llie notes to ss. 70 nnd following of the Dominion Act. Tli<" nbove section is intended to remove such donbls wlicrc ;i V>y 1;i\v is {V,V2 OXTAKIO COMPANIES ACT. Sect. 95. i)assed and coiifirniod as above provided. Such a by- " law should he passed in tlie ori>-anization stage of any company to which the section may api)ly. stock (livi- 96. For the amount of any dividend which 1he directors (lends. ,„.,y lawfully declare payable in money, they may, subject to the ajiproval in \\w followiiii^ 8ul)-soction mentioned, declare a stock dividend and is.^uo therefor .shares of the company as fully paid or partly paid, or may credit the amount of such dividend on the shares of the company already issued, but not fully paid, and the liability of the liolders of such shares shall be reduced by the amount of such dividend. 2 Geo. V. c. 31, ■ s. 94; 9 G«o.' V. c. 41, s. 3. Stock (2) No declaration of stock dividend as aforesaid shall flivideiuls to j^^ve any effect, unless and until such declaration shall have effoct niifl ^^eii confirmed by a vote of the shareholders present or repre- eonfirmcd by sented by proxy, at a general meeting duly called for consider- hohlei-s '"S the same and holding not less than two-thirds of the issued capital stock represented at such meeting. !) Deo. V. c. 41, s. 3. For a discussion of stock dividends, see the notes to s. 70 of the Dominion Act at paj>e 419, supra. 97. Subject matter : — Xo loan l)y couKpany to shareholders. See Dominion Act, ss. 29 (2) and 84. 98. Subject matter : — (1) Liability of directors for wages. (2) Xo liability until, (a) Company sued, etc. Ccmpanj' in (^) The company has, withii; thai period, gone into liquidation, liquidation or has been ordered to be wound up ^^' and the claim for such debt has been duly filed and proved, Unless sued while director, etc. On payment (3) Liability for amount unsatisfied on execution. director (4) If the claim for such debt has been proved in liipiida- entitled to ^j^^j^ ^^ winding-up proceedings a director, upon payment of of judgment, the debt, shall be entitled to any preference which the creditor etc. paid \vould have been entitled to, and whei'e a judgment has been recovered he ."ball be entitled to an assignment of the judg- ment. 2 Geo. V. c. 31, s. 96. See Dominion Act, s. 85, which the above section substantially follow^s, except for the addition of sub- sections 2 (h) and 4 above set out. Sub-section (1) differs from the Dominion section by omitting the word "clerks." PROSPECTUS AND DIRECTORS' LIABILITY. 633 PAKT VII. Sect. 99. PROSPECTUS AND DIRECTORS' LIABILITY. 99.— ( Din this Pari, Iron.'^"^**' (a) ''Company" shall include a company proposed to be " Company." incorporated ; (&) "Prospectus" shall mean any prospectus, notice cir- " prospec- cular, advertisement or other invitation offering for tus." subscription or purchase any shares, debentures, de- benture stock, or other securities of a company, or published or issued for the purpose of being used to promote or aid in the subscription or purchase of such shares, debentures, debenture stock or securities. 2 Geo. Y. c. 31, s. 97 (1). See Dominion Act, s. 43. The meaning of sub-section (b) was considered in McCurdy v. Oak Tire, dc, Co., Ltd. (1919), 44 O. L. R.. 571. An advertisement designed to accomplish the pur- pose mentioned in sub-section (/>) is a prospectus within the meaning of the section : Be Hex v. Garvin (1909), 18 0. L. R. 49. Tlie judgment indicates that the scope of the sub-section is very wide. Quaere, whether it is a compliance with the Act to publish the filed prospectus along with and as part of an adver- tisement which is not itself fiknl. In Rex v. Garvirt, supra, Meredith, C.J., said at page 55, "It is plain from the Act I tliink, tliat it has in view the issue not of one but of several prospectuses, and tlie policy of the Act appears to be that upon every occasion upon wliicli the company desire to issue a prospectus for the ])iiri)()s<' of inviting persons to take stock or to lend luoiii'V to oi- to take the debentures of the company, tlicrc sliall be a prospectus filed, and that it shall contain llie informa- tion which the Act re(iuires to be inserted in lli<' pro- spectus; and that what il rcfpiires is tliat the i)ro- spectus, in <'very case in which ;i prospectus is neces- sary, is 1o be fih-d with Hh' Secretary, ;in(l tlint the i>nb lishe'd prospectus sliall stat.' on Its face Ili;it it h;is ()34 ONTARIO COMPANIES ACT. Sect. 99. been so filed. It seems to nie, therefore, that it fol- lows that when the docnment in question was pub- lished, it ought to have contained what the prospectus then on file in the Secretary's office contained; and — I leave out of consideration any mere verbal difference — that any difference between the advertisement which was published and the prospectus filed made the publi- cation of the advertisement a violation of the Act, and rendered a director who was a party to the issuing of it liable to the penalties mentioned in s. 100 (now s. 105)." Semhle, a mere statement that there is a company offering shares for sale, and that a prospectus can be obtained on application, is an infraction of the Act, ibid. Appl.cation of this part. (2) This Part, except section 102, shall apply to every company, whether formed before or after the commencement of this Act, which offers to the pnblic for subscription shares, debentures, debenture stock or other securities and to every compan,y, whether incorporated under the law of Ontario or otherwise, the shares, debentures, debenture stock or other securities of which are dealt in within Ontario. 2 Geo. V. c. 31, s. 97 (2) ; 3-4 Geo. V. c. 18, s. 33 (16). Queer e, whether sub-section (2) affects a Dominion Company. As to the scope of the above sub-section, see Craiv- ford V. Bathurst Land, dc, Co. (1918), 42 0. L. R. 256, 263. When (2) This Part, except section 102, shall apply to every deemed^ or any person employed or authorized by it for that purpose, to be offer- directly or indirectly invites or solicits either orally or by a ing ^^ares, prospectus, or any other means, any other person to apply puTJiic. '^^ subscribe for or to buy or otherwise acquire any shares, debentures, del>enture stock or other securities of the company, or where any person who has subscribed for or underwritten or to whom has been allotted the whole or the major part of any issue of the company's shares, debentures, debenture stock or other securities so invites or solicits any person to apply or subscribe for or to buy or otherwise acquire any of such last mentioned shares, debentures, or debenture stock, the company shall be deemed to offer to the public for subscription within PEOSPECTUS AND DIRECTORS' LIABILITY. 635 the meaning of this Act, its shares, debentures, debenture stock Sect. 99. or other securities. 2 Geo. Y. c. 31, s. 97 (3). 100. — (1) Upon any offer of shares to the public for sub- -when a com- scription a company may pay a commission to any person in niission may consideration of his subscribing or agreeing to subscribe, whether ^ ^^^ ' absolutely or conditionally, for any shares in the company, or procuring or agreeing to procure subscriptions, whether ab- solute or conditional, for any shares, if the payment of the commission and the amount or rate of the commission paid or agreed to be paid are authorized by the T^etters Patent or Supplementary Letters Patent and disclosed in the prospectus, and the commission paid or agreed to be paid does not exceed " the amount or rate so authorized. (2) Except as provided by sub-section 1 no company shall Capital not apply any of its shares or capital, either directly or indirectly, ^^ppfj^d ^^ in payment of any commission, discount or allowance to any paying person in consideration of his subscribing or agreeing to sub- oommission.s scribe, whether absolutely or conditionally for any shares of pVovided. the company or procui'ing or agreeing to procure sub- scriptions, whether absolute or conditional, for any such shares, whether the shares or capital be so applied by being added to the purchase money of any property acquired by the company or to the contract price of any work to be exe- cuted for the company, or be paid out of the nominal purchase money or contract price or otherwise. (3) Xothing in this section shall affect the power of any I'.rokerage company to pay such brokerage as it has heretofore been law- "'"^' ^^ P'"*'- ful for a company to pay. 2 Geo. V. c. 31, s. 98. The above section follows with modifications s. 89 of the Imperial Companies (Consolidation) Act, 1908, for a discussion of wliicli section see Buckley, 9t.li od., pp. 212-217. In connection with the departures from the Im- perial section, it should be noted that sub-section (1) only authorizes the payment of commission in I'cspect of an offer of shares 1o flic public Coi' subs('rii)tioii. Apparently the com])any would be precluded from paying a commission in respect of m jirivatc snlc or subscri))tion of its shares. J^ut it sliould also be noted fli;it llic sljiliilory stiilc- ment in lieu of ])rospectus(Form 5), conli'iiiphilcs the payment of commission and that sucli stjilcincnl is used where there is no public issue. Moreover letters ])at- ent have been issued expressly anfjioriziiij;- flic i);iy- ment of commission witlioiif liiiiif;it ion except as to 686 t).\rAl!l() COM I'ANIKS AW ra.viiuMit of ci>iiiinis- sion. Sect. 100. anioiiiit, as to ^vllich, as regards shares, \ho luaxiimini which will h(» aHowod in tiio letters i)ateiit is 25 pov cent, of tJie aiiioinit realized. The articles of a private company authorized pay- ment of a commission to any person in consideration of his procnrini>- suhscriptions and the company offered the plaintiff, who was not a broker, a connnission in consideration of the plaintiff being the means of pro- viding such sum as tlie company might accept from her introduction. The amount or rate of the commission was not disclosed under sub-sec. 1. C, as the result of the plaintiff's introduction, subscribed for shares. The company paid the plaintiif £200 commission, and when the i)laintilf sued for the l)alance the company counterclaimed for the amount already paid. It w^as held that (1) the commission was not brokerage within sub-section 3; (2) it was commission within sub-section 1 ; not having been disclosed in any statement pursu- ant to sub-section 1, it was unlawful under sub-section 2. Accordingly the plaintiff could not recover the bal- ance of £260. It had been originally intended that the advance of moneys by C. to the company should be by way of loan, in which event the plaintitf would have been entitled to her commission ; the change in this regard having been made without her intervention and as she had no notice that the payment of conmiission was illegal, the plaintiff was entitled to retain the £200. Andreae v. Zinc Mines (1918), 2 K. B. 454; 87 L. J. K. B. 1019. Where the section has not been complied with, a commission wrongfully paid can be recovered, Re Can- adian Diamond Co. {Broad's Case) (1912-13), 6 A. L. R. 42, a case under the Alberta Companies Winding-up Ordinance, 1903. What com- panies must file pros- pectus. Purchases, subscrip- tions, etc., deemed to be induced bj- pros- pectus. 101. — (] ) KveiT public company before offering to the pub- lic for subscript ion shares, debentures, debenture stock or other securities shall issue a prospectus as hereinafter set out. (2) All purchases, subscriptions or other acquisitions of shares, debentures, debenture stock or other securities of any company required to tile a prospectus or a statement in lieu of a prospectus, shall be deemed, as against the company and the signatories to the prospectus or statement, to be induced by PEOSPECTUS AND DIRECTORS ' LIABILITY. 637 such prosi>ectus or statement, any term, proviso or condition Sect. 101. thereof to the contrary notwithstanding. ■ — — (3) A subscription for shares, debentures or debenture stock Delivery of shall not l)e binding on the subscriber unless at or before the copy of subscription there is delivered to him a copy of the prospectus, orstateSent if any, issued by the company, or if a prospectus has not been before sub- issued a copy of the statement mentioned in flection 102. scnption. (l) The subscriber to be entitled to the benefit of sub-sec- Subscriber tion 3 nuist elect to withdraw his subscription before or within after Jjojice ten days af-ter notice of the allotment to him of the shares, de- "^'wirbdraw. bentures, or debenture stock for which he has subscribed. 2 Geo. V. c. 31, s. 99. If no prospectus, or statement in lieu of a pro- Failure to spectus, has been delivered to the subscriber, he is pectus to "^ entitled to withdraw; and if no notice of allotment is subscriber, sent to him he can withdraw at any time : McCurdij v. Oak Tire, Sc, Co., Ltd. (1919), 44 0. L. R. 571. Under this section when it read, "No subscription for stock . . . induced or obtained by verbab repre- sentations, shall be binding upon the subscriber, unless prior to his so subscribing he shall have received a copy of the prospectus" (6 Edw. VII. c. '27, s. 3 (3)), it was held that the rule as to voidable subscriptions applied. The subscriber might approve or disaffirm, and a subscriber who had done nothing to repudiate was held disentitled to raise the defence three years after the date of his subscription: Morrishnrgh (C Ottaira v. O'Connor (1915), 34 O. L. R. IGl. And in lie Retail Merchants Association, Ltd. (1913-4), 7 Alta. L. R. 322, it was held that such a provision is ap- plicable to the case of a comiiany which has never issued a prospectus and that subsci'ilxTs for shares of a company which has not complied with such provision are not estopped merely by attendance at siiardiobl- ers' meetings Iroin availing themselves of lis i>r()tec- tiou. The object of llie Act is to prolrd Ww public, iioi a promoter or a person who is to bhnne for not hav- ing a prospectus issued oi- filed: /''"// WiU'iaiu Coiii- werciaJ Chawhers v. flradrn (1914), (I < >. W. X. 24, affirmed (1914-15), 7 ( ). W. \. 079. In the last mentioiK'd case tiie effect of Mib section (4) is also considered. See also Aikcns v. Wdiif/li (1919), Ki (». \V. N. 390. 638 Sect. 101. Particulars as to incor- porators. Time of calls. Commis- sions. Promoter's remunera- tion. ONTARIO COMPANIES ACT. Failure to issue a prospectus is a matter ['ov the purchaser to raise. The comi)aiiy cau not set up its o\m default: Webster v. Jury Copper Mines (1!)()S), 12 0. W. R. 032,636. 102. Subject matter:— (1) Statement in lien of prospectus. See Dominion Act, s. 43C. (2) Not to apply to a private company. See Dominion Act, s. 43C (2). 103. Subject matter:— ( 1 ) Date of prospectus. (2) Prospectus to be signed and tiled. (3) Not to be filed until signed; etc. (4) Not to be issued until filed. See Dominion Act, s. 43A. 104. Subject matter : — (1) What to be disclosed in prospectus. (a) The names,' descriptions and addresses of the orig- inal incorporators, and the number of shares subscribed for by them respectively ; (b) Qualification and remuneration of directors. (c) Directors; (d) Subscription upon which allotmentr may proceed : (e) The time or times at whicb, under the by-laws of the company, a further call or calls may be made upon shares subscribed for; (/) Shares and bonds allotted for other than casli . consideration ; (g) Vendors of property to company; (h) Consideration for purchase. (i) The amount, if any, paid within the next preceding two years or payable as commission for subscrib- ing, or agreeing to subscribe, or procuring or agreeing to procni'e subscriptions for any shares in the company, or foi- underwriting or procur- ing underwriting of any securities issued or to ' be issued l)y the company or the rate of any such commission ; (/) Preliminary expenses. (]f) The amount paid for the next preceeding three years or intended to be paid in cash, shares, debentures, debenture stock or other securities, to any promoter and the consideration for any such payment; PROSPECTUS AND DIRECTORS' LIABILITY. 639 (/) The date of and parties to every material contract Sect. 104. not being a contract entered into in the ordinary p.^^j.j^^^j.^^.^ course of the business carried on or intended to .,8 to be carried on by the company or a contract |J^'Jj*^j.^^^|,\^g entered into more than three years before the ^"''" ''''^ ^" date of issue of the prospectus, and a reason- able time and place at whioli such material con- tract or a copy thereof may be inspected ; {m) Names, etc., of auditors; (n) Interest of directors in property taken by com- pany. See Dominion Act, s. 43 B (1). Sub-sections (i), (k) and (l) differ from the corresponding Dominion sections by making the period three years instead of two, and ihe Dominion sub-section corresponding to subsection (i) above provides that the commission payable to sub-underwriters need not be stated. (2) Subject matter: — " Vendor " what to include. See Dominion Act, s. 43 B (2). (3) Subject matter: — When "vendor" includes "lessor." See Dominion Act, s. 43 B (3).. (4) The rc(|uiroments as to the original incorporators and Rciuhe- the qualification, remuneration, and interest of directors, nii^^ ""'"^^nai the amount or estimated amount of preliminary expenses, shall incorpora- not apply in the case of a prospectus issued more than one ^';',Jj*Jj"|^* *^-''" vear al'tei' jhf dnte of the fi'r.st general meeting. where See Dominion Act, s. 4.5 n (n). than one yejir after (:)) III ihe case of ;i |»iospectus i.ssued more than one .yeai' iJi'oiftiifp."*''"^ i\f\('.r the dale of such meeting the obligation to disclose '"i^' oi.iigation I'laterinl con tracts sliall Ix" limited to a pcfiod of two yenrs i,, .liselose next preceding tiie issue of the |)ros|M'(tus. !'oiH7."n-t*s (G) Subject matter: — limited. When prospectus advertised in newspapers. See Doiniiiioii Act, s. 43 I^ (')), wliicli is slightly different in its terms. (7) Snbjeet matter:— Applic;itif)n of section. See Doniiiiion Act, s. 43 B (7). (UO ONTARIO COMPANIES ACT. Sect. 104. 1 Vanity. Exceptions. (S) Sul)jcH't nialU'r: — \\';u\rr of i-(ini]ili;mr(' with section Id Ue void. See Dominion Act, s. 43 B (4). 105. — (1) Every juovisioual (liicetor, director or other ])er- sou responsihh^ for the issue of a prospectus for every violation of any of the pioN isions of the next i)receding four sections shall incur a pi'iialty not exceeding $200, unless As regards any matter, not disclosed, he was not cognizant thereoi' ; or Liability iiuclcr lareneral law not affected. Capital to correctly stated in advertise- ments, etc Penalty. The non-compliance arose front an honest mistake of fai't on his part ; In the case of non-compliance with the requirements of paragraph n of suh-section 1 of section 101, it is proved that he had no knowledge of the mat- ters not disclosed. See Dominion Act, s. 43 B (6). (2) Nothing in lliis section or the next preceding four sections shall limit or diminish any liability which any person may incur under the general law ajjart from this Act. 2 Geo. V. c. 31, s. 103. See Dominion Act, s. 43 B (9), be 106. — (1) Where any advertisement, letter-head, account or document issued or published by any corporation or any of its officers, agents or employees purports to state the capital of . the corix)ration, unless it is stated to be the authorized capital, then the capital actually and in good faith subscribed, and no more shall be so stated. (2) Any such corporation, officer, agent or employee who causes to be inserted an advei'tisement or who publishes, issues . or causes to l)e published or issued any advertisement, letter- head, account or document w^hich states the capital, otherwise than as mentionccl in suh-section 1, or wliicli contains any false statement as to the incorporation, control, supervision, manage- ment or financial standing of such coi'poration shall incur a penalty of not less than $50 nor moi'e than $200. 2 Geo. V. c. 31, s. 104. 107. Subject iiuitter: — (1) Liability foi' statements in [)i-os])ectus. See Dominion Act, s. 43 D. (1), which the above section substantially follows, except that the order of the sub-sections is changed and that a ''notice" as well as a prospectus and "other securities" as well as shares, debentures, etc., are covered. PROSPECTUS AND DIEECTOES' LIABILITY. 641 (3) Subject matter: — Sect. 107. Who to be deemed a promoter. See Dominion Act, s. 43 D (5). The Ontario section includes a "notice" as well as a prospectus. 108. Subject matter : — Statements in prospectus for raising further capital. See Dominion Act, s. 43 D (2), which is limited to comi^anies existing on September 1, 1917. 109. Subject matter: — Indemnity where name of person has been improperly in- serted. See Dominion Act, s. 43 D (3). The Ontario section covers a "notice" as well as a prospectus. 110. Subject matter: — Contribution from co-director. See Dominion Act, s. 43 D (4). The Ontario section covers a ' ' notice ' ' as well as a prospectus. PART VIII. PUBLIC COMPANIES. 111. This part shall apply to all public companies except ^ niication those wliic-li do not offer sliares, del)entures or debenture stock of Part to the public for subscription. 2 Geo. V. c. 31, s. lOiJ. '^''^'• 112. — (1) No allotment shall be made of any share capital Restrictions offered to the pHt)]ie for subscription unless "" ••>Hfi'' "'•'"*• ' ' Imp. Act, (i»lu";ition. Ki'pa.vment wluTo ooiulitious not rom- lilicd with. KxttMisiou of tinio. ("oiulitiou as to waiving compliance void. Not applic- able to sub- sequent allotments. Effect of irregular allotment. Imp. 1908, s. 8n. Director to compen- sate com- pany and allottee. ONTAKTO COMPANIES ACT. (o) Till' jiiiiounl pavaljlr on appliral ion on each sliaro shall not he less than live per centum of the noniinal amount of the share. (4) If siicli eoiulitions have not heen complied with on the e.\]u'ration of ninotv (lavs after the first issue of the ])ros- pectus all nu)nev rect'ived from applicants for shares shall he forthwith repaid to them without interest, and if any such money is not so repaid within one hundred days after the issue of the prospectus the directors of the company shall he jointly and .severally liahle to repay that money with interest fj'om the expiration of the ninety days, hut a director shall not he liable if he proves thai Ihc loss of llic money was not due to any mi.scondiU't or negligence on his part. (.5) The l'ro\incial Secretary may extend tlie times by this section limited. (6) Any condition rec|uiring ur biiuling any applicant for share's to waive compliance with any requirement of this section shall be void. (7) This section, except sub-section 3, shall not apply to any allotnuMit of sliares subsequent to the first allotment of shares offered hy a public company. 2 (ieo. V. c. 31, s. 110. The above section follows s. 85 of the Imperial Com- panies (Consolidation) Act, 1908, for a discussion of which see Buckley, 9th ed., p. 196. Shares may be allotted before the company is en- titled to commence business: Re Western Canadian Fire, Craig's Case (1914), 19 D. L. R. 170. Part VIII is for the protection of sharehoklers, and the effect of non-compliance is to entitle subscribers to cancellation of their subscriptions and removal of their names from the list of contributories notwith- standing a winding-up under the Dominion Act: Be Carpenter, Ltd., HawiUon's Case (1916), 29 T). L. R. 683 ; 35 0. L. R. 626. 113. — (T) An anotnicnt made by a company to an appli- cant in contravention of the foregoing ])rovisions of tliis Part shall l)e voidable at the instance of the applicant within one month after the holding of the statutory meeting of the com- jjany, and not later, and shall be so voidalde notwithstanding that the company is in conrse of being wound np. (2) If anv director of a company knowingly contravenes or permits or authorizes the contravention of any of the fore- going provisions of this Part with respect to allotment he shall be liable to compensate the company and the allottee respectively PUBLIC COMPANIES. 643 for any loss, damages or costs which the company or the allot Uh' Sect. 113. may have sustained or incurred thereby. (3) Xo action shall be brought to recover such loss, dam- Proceed iugs ages or costs after the expiration of two rears from the date ^^ ^^ ^"'"' of the allotment. 2 Geo. Y. c. 31, s. 111. ' S*in two See Imperial Companies (Consolidation) Act, 1908,^^'^^^' s. 86 and Buckley, 9tli ed., p. 197. An allotment without compliance with the provi- sions of s. 112 is voidable, not void: Finance and Issue, Ltd. v. Canadian Produce Corporation (1905), 1 Ch. 37, 43. If it is to be avoided it can only be upon a record properly framed for that purpose: Gowqanda Queen Mines v. Boeckh (1911), 24 0. L. R. 293, 300; affirmed (1912), 46 S. C. R. 645. See articles in (1909) Canada Law Journal at pp. 145,220,338. Where no statutory meeting has been held, the ap- plicant's claim to cancellation is still in time, notwith- standing a winding-up : Re Carpenter, Ltd., Hamilton's Case (1916), 29 I). L. R. 683 ; 35rO. L. R. 626. Actual legal proceedings to rescind an allotment made in contravention of s. 112 need not he taken within tlie month; notice of avoidance, followed by prompt legal proceedings, will suffice: ibid. Seinble, the notice need not specify the ground of avoidance: In re National Motor M ail-Coach (190S), 2 Ch. 228. The option to cancel is the shai-eholder's; the conii)any can not insist on paying back the application moneys against the shareholder's wish: Burton v. Bcvan (1908), 2 Ch. 240. 114.-— ( I ) A comnniiv shall iidt (•oiiiincnrc ;iii\ lin>iii('ss oi- ,, . ,. I . ' • , Kesl fictions exercise any hoirowing powers unu'ss; ,,„ com- ('/) .Shares hehl sul)iect to the payincnt of lli.- whole aiii.Miiit !!ri'i!sTn"i thereof in cash have been allotted t<» an aniount not Ini|.. T.kkS. less in tlic whole than the niininuiiii siili-eription : '^ ''^'' and, {li\ K\ery (lirect(»r of the conijiany has j)ai(l to the eompany on each of the shares taken or contracted to be taken by him, and for which he is liable to pay in cash, a portion erjua] to the proportion payable on a|)plica- tion and allotment on the shares olfercd hv ;i public company ; and. ()44 ONTARIO COMPANIES AC T. Sect. 114. ((•) TIuM-e lias bcvn liled willi the I'ion iiuinl Secretary a statutory deelaialidii liy tlie secretary <>r one oC tlie directors in the presiTilied rurin thai sucli comli- tious have been complied wiUi and the Provincial Secretary has certified as provided by sub-section 2. ("ortifioate (^•>) 'pj^g ^Provincial Secretary may, on the filing of the L'ompiiuy statutory declaration, certify tliat the company is entitled to '»iiy commence i)usiness, and tlic ci'rtificate shall be conclusive evi- bushios!!!^ dence that the company is so entitled, hut upon it being shown that the certificate was made upon any false statement or upon CauwUation the withholding of any nurterial statement the Provincial Secre- of certificate ^^.y j-^-^j^y cancel and annul such certificate. Effect of (3) Any contract made by a company before the date at previously ^^hich it is entitled to commence business sliall be provisional made. only, and shall not be binding on the company until that date, and on that date it shall become binding. Siraultane- (4) Nothing in this section shall prevent the simultaneous ous offer Qffgp fQp subscription or allotment of any shares, debentures, aud deb^en- or debenture stock or the receipt of any money payable on any tures. application. Penalty for (5) If any company commences business or exercises bor- oommeucmg j-Q^yij^g powers in contravention of this section every person before who is responsible for the contravention shall, without prejudice proper time, to any other liability, incur a penalty not exceeding $50 for every day during which the contravention continues. Inuocent (6) Where a company has commenced business without hav- nuu-com- jjjg complied with the requirements of sub-section 1 of section 7 Edw^ VII. 108 of The Ontario Companies Act, 1907, and the Lieutenant- c. 34, s. 108. Governor-in-Council is satisfied that the non-compliance was due to inadvertence, error or mistake, and that before commencing business the conditions mentioned in clauses («) and (b) of that section had been complied with, he may authorize the company to file the statutory declaration nunc pro tunc, and if it is filed within one month after the date of the Order-in-Council it shall have the same effect as if it- had been filed before tlie company commenced business. 2 Geo. V. c. 31, s. 112. See Imperial Comxjanies (Consolidation) Act, 1908, s. 87, and Buckley, 9th ed., p. 199. Suing for calls is not commencing business : Fort William Commercial Chambers v. Braden (1914), 6 0. W. N. 24; affirmed (1914-5), 7 0. W. N. 679. The form of statutory declaration required under sub-section (1) (c) is obtainable gratis from the De- partment. The Imperial section corresponding to sub-section (2) reads shall instead of may, and it should also be KESTRICTIOXS OX COMMENCEMENT OF BUSINESS. 645 noted that under the Ontario section the certificate Sect. 114. may be withdrawn if it is shown to have been made upon any false statement or upon the withholding of any material statement. What the effect of such withdrawal is on existing contracts is not stated. Under these circumstances, it may be important for persons contracting with a company recently organ- ized to satisfy themselves that no misstatement or with- holding of material statements has taken place. The writers are not aware of any certificate having been withdrawn under the section. As to the conclusiveness of the certificate, see Go2v- ganda Queen Mines v. Boeckh (1911), 24 0. L. E. 293, 299; affirmed (1912) 46 S. C. R. 645. This sub-section was considered in Re Car pen- Sub-see. ter, Ltd., Hamilton's case (1915) 29 D. L. R. 683 ; where (^^>- Clute, J., at pages 696, 697, said: ''These provisions have been held to apply so as to prevent the recov- ery even in winding-up proceedings : In re Otto Elec- trical Manufacturing Co. (1905) Limited (1906), 2 Oh. 390, where it was held that the word "provi- sional" means that the contract is to be read as if it contained a provision that it should not be binding upon the company unless and until the company l)e- came entitled to commence business. It was there held that the section applies to all contracts of a company, whether preliminary or final, or in the course of carry- ing on its business. Where therefore, the company had gone into liquidation without having become entitled to commence business, a claim by a person resting on cer- tain alleged contracts witli the company, one ]);iit of the claim being for moneys paid f'oi- t'urnishiiig tem- porary offices for the company, was disallowed. See also Xf'ir Druce-Porthnid Co. Lhnifcd v. JiJdkislon (1908), 24 TimesL. R. 583." 115. All .-iiiii.s received by the oompany or liv niiy proinoi(M-, m„„o.vs (liivcior, olliccr or nfront thoroof slmll l.o liold in (rust l.y «''.^ ['..'J^^, '"''' '" conipfiny or such promoter, flireetor, onicor or aj^ent until deposited in a chartered bank to the credit of the company and shall 1)0 so deposited and there remain in trust until the issue of the certificate by the Proviucial Secretary. 2 neo. V. r. 31, s. 113. (i4li ONTARIO COMPANIES ACT. Sect. 116. 116.-- ( 1 ) Wlicrc ;i c-(iiu|);in\ mnki's any allol iiuMit of its shares it shall, within two nionllis thcicarici-. lilc with the i'ro- !.ur:l vinoial Secretary: Imp. Aot. ((/) A return of \\\v allotments, statino- the ninnl)ei' and j.HK>. s. ^c. nominal amount of the shares eom])rise(l m each allotment, the names, addresses and descriptions of the allottees, and the amount, if any. paid or due and jiayahle on each share; and (h) In the case of shares allotted in whole or in part for a consideration other than cash, a contract in writing constitnting the title of the allottee to snch allotment, together with any contract of sale, or for services or other consideration in respect of which such allot- ment was made and a return stating the numher and nominal amount of shares so allotted, the extent to which they are to be treated as paid np, and the consideration for which they have been allotted. ivnalty for (2) If default is made in complying with the ]'e(purements default. of fi,jg section every director, manager, secretary or other othcer of the comipany who is knowingly a party to the default shall incur a penalty not exceeding $50 for every day dui'ing which the default continues. 2 Geo. V. c. 31, s. 114. See Imperial Companies (Consolidation; Act, 1908, s. 88, and Buckley, 9th ed., pp. 200-211. No particular form of return is prescribed. The Ontario section does not make any provision for relief in the event of accidental or inadvertent failure to make the return within the time prescribed. In such case it is submitted that the only course is to re-allot without prejudice to any prior transfers of shares. Statutor ^^^- — (-^) Every comj)any shall, within a period of not moetings. less than one month nor more than thi'ee months from the date at which the company is entitled to commence business, hold a general meeting of its shareholders, which shall be called the statutory meeting. [As to notice of meetings, see section .'/^.| Report to (2) The directors shall, at least ten days before the day be .sent to on which the meeting is to ])e held, send to every shareholder hoki'ers. ^ report certified \>\ not less than two diicctors stating: (a) The total nundier of shares allotted, distinguishing shares allotted as fully or partly paid up otherwise than in cash, and stating in the case of shares partly paid up the extent to which they are so paid up, and in cither case the consideration for which they have been allotted ; STATUTORY MEETING. 647 {b) The total amount of cash received by the company in Sect. 117. respect of such shares so distinguished; - (r) An abstract of the receipts and payments of the com- pany on capital account to the date of the report, and an account or estimate of the preliminary ex- penses of the company; (d) The names, addresses and descriptions of the directors. auditors, if any, manager, if any, and secretary of the company; and (e) The particulars of any contract, the modification of which is to be submitted to the meeting for its ap- proval, together with the particulars of the modifica- tio]i Of pi'ojTOsed modification. (3) The report, so far as it relates to the shares allotted by Report to the coni])any, and to the cash received in respect of such shares, ^^, '^.^'idkors and to tiie receipts and payments of the company on capital ac- count, shall be certified as correct by the auditors, if any, of the company. (•4) The directors shall cause a copy of the report so Kcpori lu bo certified to be filed with the Provincial "Secretary forthwith p,*;!,\.in'Jil}i after the sending thereof to tlie shareliolders. Secretary. (r») Tbe directors shall cause a list showing the names, Lfsts of descriptions and addresses of the shareholders and the number jJ^"JJJ''\^j!^.^^"® of shares held by them respectively, to be produced at the com- diu-ed mencement of the meeting, and to remain open and accessible i>t meeting, to any shareholder during the continuance of. the meeting. (6) The shareholders present at the meeting shall be at «l>ai-e- liberty to discuss any matter relating to the formation of the JJ^^j^g ^^J^, c<)mpany, or arising out of the report, whether previous notice ness of has or has not been given, but no resolution of which notice Jj^'^R'j"'^ '** has not Ikkui duly given may be passed. (?) Tlio mooting may be adjoui'ned from time to time, and Adjonni- at an adjourned meeting any resolution of which notice has been ""'"'^'^• duly given, either before. or subsequently to the former meeting, niay be passed, and at the adjourned meeting the same powers may be exeici.^od as at an original mooting. (8) If default is made in filing such repoi't or in holding tbe A|>pli'-;itioii statutory meeting, then at the expiration of fourteen days aft^'i" Ji'.'rju'iit'*^ ' the last day on which the meeting ought to have been held any mado in shareholder may apply to the Court for the winding up of the |j|'!,'.'tj',\'5j company, and tbe Court may either direct that the company be wound up or give directions for tlie report being filed or a meet- ing being held, or make .such other order as may be deemed just, and may order that the costs of the application bo paid by any person who, in tbe opinif)ii (jf the Court, i^ ii.s|inii-il'l" f'T the default. 2 Goo. V. c. 31, s. 115. See Iniix'iJui Ctuiipaiiics (ToiisoliflMtion) Act, lOOH, P. 65. 648 ONTAKIO COMPANIES ACT. Tlio date at which the company is entitled to com- _^1 '_ mence business, from which the period mentioned in sub-sec. (1) runs, is the date of tlie certificate given under s. 114. The notice must state that the meeting is the statutory meeting: Gardner v. Iredale (1912), 1 Cli. 700. In a bona fide case of inadvertent failure to hold the meeting, an order directing the holding of the meeting may be obtained from a Judge in Chambers on notice of motion, supported by affidavits. It is advisable to have the company represented and consent to the order. 117(/. Subject matter : — Cheese and butter factories. PART IX. BOOKS, INSPECTION AND AUDITORS. 118. Subject matter:— Record books to be kept and contents. See Dominion Act, ss. 89 and 90. Books to be 119- — (1) The books mentioned in the next preceding sec- kept at tion and in section 124, sball be kept at the bead office of head office. ^^^^ corporation within Ontario, whether the comipany is per- mitted to hold its meetings out of Ontario or not. Penalty (2) Any director, officer or employee of a corporation who for ^ removes or assists in removing .«uch books from Ontario or who otherwi.se contravenes tbe provisions of this section shall incur a penalty of $200. (3) Upon necessity therefor being shown and adequate assurance given that isuch books may be .Inspected within Ontario by any person entitled thereto after application for sucli inspection to the Provincial Secretary tbe Lieutenant-Governor in Council may relieve any corporation permitted to bold its meetings oiit of Ontario from tbe provisions of this section upon such terms as he may see fit. 2 Geo. V. c. 31, s. 117. See Dominion Act, s. 91. Application to keep the company's books out of Ontario may be made by a company which by its letters removal. Proviso. REMOVAL OF BOOKS FROM PROVINCE. 649 patent or supplementary letters patent lias authority Sect. 119. to hold its meetings out of Ontario. Accordingly, it is advisable to ask for such authority in the petition for incorporation. Many companies for the purpose of listing- their shares on a stock exchange outside of Ontario, or for other purposes, find it necessary or convenient to have their share register and register of transfers kept by a registrar and transfer agent resident outside the Pro- vince. In such instances the company must take steps to be relieved from the provisions of the section as above provided. The following are the instructions issued by the Department : — Keeping- Books out of the Province of Ontario. 1. Upon necessity therefor being shown and ade- Depart- quate assurance given that the books of a corporation "auctions. may be inspected within Ontario by any person entitled thereto after application for such inspection to the Provincial Secretary, the Lieutenant-Governor in Council may relieve any corporation permitted to hold its meetings out of Ontario from the provisions of the sections which state that the books of a corporation shall be kept at the head office of the corporation within Ontario, wliether the company is permitted to hold its meetings out of Ontario or not, and that any director, ofificer or employee of a corporation who removes or assists in removing such books from Ontario or wlio otlierwise contravenes the provisions of said sections shall incur a penalty. 2. The application must be a formal petition of the corporation, signed by th(> executive officers of the cor- l)oration and passed under its common seal. 3. The petition must set forth the corjiorate name, tlie date of incorpor.-ilioii and othei- material facts and shouhl sliow (a) That tiie bulk of the shareholders Wvr wilhoiil the Province of Ontario and that il is a matter of convenience to Jiave the books removed there- from ; (i50 ONTAEIO COMPANIES ACT. Sect. 119. (b) That tlio cor[)oratioii lias authority to hold i{j.„,„vai ' meetings out of the Province ; frou'r'^'' (<:■) Tliat the corporation is not in arrears in mak- rroviiioo. ing its annual returns. 4. The facts in llic petition contained must bo veri- fied by joint affidavit or statutory declaration oL' the President and Secretary of the corporation. 5. The signatures to the i3etition and impression of the seal must be verified by affidavit or statutorv de- claration. 6. With the petition the corporation nmst produce the following : (a) A statutory declaration proving that the by- law authorizing the application for an Order-in- Council relieving the corporation from the pro- visions of sub-sections 1 and 2 of section 1 19 of The Ontario Companies Act has been lawfully passed by the directors and confirmed by a vote of the shareholders, present or represented by proxy at a general meeting duly called for con- sidering the same by notice specifying the terms of the by-law to be confirmed, and holding not less than two-thirds of the issued capital stock represented at such meting, or, in the case of a corporation not having share capital, by a vote of two-thirds of the members so present or re- presented as the case may be ; (b) A copy of the by-law certified as such under the seal of the corporation; (c) A certified copy of the proceedings at the meet- ing of shareholders or members with respect to the passage and sanction of the by-law; (d) A certified extract from the general by-laws of the corporation as to the calling of tlie meeting of shareholders or members ; (e) A certified cojjy of the notice mailed or copy of advertisement in the Ontario Gazette or local paper of the holding of such shareholders' or members' meeting; (/) A power of attorney duly executed under the seal of the corporation. REMOVAL OF BOOKS FROM PROVINCE. 651 The attorney appointed by the applicant cor- Sect. 119. poration must be a person resident in Ontario, j^^ ^j.^. or a corporation having its head office in the mental m- T) • Btructions. Frovmce. The power may contain any provision not in- consistent with the duties of the attorney to be exercised under the laws of the Province, but it must include words expressly authorizing- the attorney : — "To act as such, and to sue and be sued, plead or be impleaded in any court in Ontario and generally on behalf of the corporation and within Ontario to accept service of process, and to receive all lawful notices, and, for the purposes of the corporation, to do all acts and execute all deeds and other instruments re- lating to the matters within the scope of the power of attorney." The power must also provide that until due lawful notice of the appointment of another and subsequent attorney has been given to and ac- cepted by the Provincial Secretary, service of process or of papers and notices upon the per- son or corporation mentioned in the original or other power last filed with the Provincial Secre- tary shall be accepted by the applicant corpora- tion as sufficient service in the premises. {(J) Tlic consent of the attorney to act as such, duly verified by affidavit or statutory declaration ol' 'subscribing witness; {h) A consent to the winding-u]) of the coi'itoi-ation, which consent shall 1k' in the folh>\viiig form: Aftei' application made to the Secretary of the Province of Onlnrio by any pei'soii ciiiillcd thereto foi* the inspection of sncli of Ihc hooks of hcicinnricr called "the corijoi-atioii" as ai'c mcnlioncd in Sections IIS ;ni-, njiMH due (>rv_! ONTAEIO COMPANIES ACT. Sect. 119. notice to the corporation, l)o made by the said j,,,,„^,^„j Provincial Secretary, and upon its a[)pearing to ^^f I'wks the satisfaction of a Judge of the Supreme Court Province. of Ontario, upon a petition in that behalf pre- sentinl by such persons applying as aforesaid upon due notice to the corporation tliat such person has suffered substantial loss or damage by reason of such failure, thio corporation doth HEREBY consent to au Order of such Judge for winding up the corporation. In witness whereof the corporation has caused its corporate seal to be afiSxed hereto by the hands of its proper officers in that behalf, this day of , 19 . . . . By' Witness : President. (Seal) Secretary. and (i) A bond to the Provincial Treasurer in the sum of $500, which bond shall be in the following form: Bond. Whereas Section 119 of The Ontario Com- panies Act provides that the books therein re- ferred to shall be kept at the head office of the corporation within Ontario, whether the corpor- ation is permitted to hold its meetings out of On- tario or not. And whereas the said Section 119 further pro- vides that, upon the conditions therein men- tioned, the Lieutenant-Governor in Council may relieve any corporation permitted to hold its meetings out of Ontario from the provisions of the said Section 1 19, upon such terms as he may see fit, necessity therefor being shown and ade- quate assurance given that such books may be inspected within Ontario by any person entitled thereto after application for such inspection to the Provincial Secretary. And whereas the corporation hereinafter mentioned, being a cory)oration permitted to REMOVAL OF BOOKS FROM PROVINCE. 653 hold its meetings out of Ontario, iias b.v its peti- Sect. 119. tion in that behalf prayed that it may be re- lieved from the provisions of the said Section 119. And whereas the Secretary of the Province of Ontario has directed that, as a condition of granting the said relief, these presents be exe- cuted by the said corporation. Xow therefore these presents witness that is held and firmly bound unto the Treasurer of the Province of Ontario for the time being in the penal sum of five hun- dred dollars ($500), to be paid to said Provin- cial Treasurer for the time being, or to any per- son who may be entitled, upon assignment from the said Provincial Treasurer for the time being, to recover the sum hereby secured, for which payment well and truly to be made .... binds itself, its successors and assigns, firmly by these presents. In witness whereof has caused its corporate seal to be affixed hereto by the hands of its proper officers in that behalf, this day of , 19. . . . By Witness : (Corporation) President. (Seal) Secretary. The condition of this obligation is such that if doth at all i)roper times allow the tiooks mentioned in Section 119 <>r The Ontario Companies Act aforesaid 1<> Ix' in- spected by any person entitled thereto as the Secretary of the Province of Ontario may direct fi-oni time to time by due notice to llie said cor- ])oration, af'tei- ai)plica1ion to liiiii by such per- son for such iii.'^[)e('tioii, then this obligation is to be void, otherwise to remain in fnli force and virtue. 6'A OXTAUll) CDMi'AMES ACT, Sect. 120. 120. — ( I ) No iliroctoi, officer oi' oihijIoacc of tlio corporatiou ".shall knowingly nijiko or asf^i.st in luaking aiiv milnie enlry in nny of its books, or refuse or neglect to make Jiiiy j'.roper entry therein. • (2) Any pei'son wilfully \iolating I lie [H'ovisions of this section shall be liable iu damages lor all loss or injury which any person interested niav have sustained thereby. 2 (jleo. V. c. 31, s. 118. See Doniinioii Act, s. 117. riitnio. oiurios. I\MiaUv. Powers 121. — (1) if liie ruime of any person is, without sulTicient to ontrff's'in '^''^'■'^*^' entered in or omitted from any such book, or if default omissions from aud reetiiieation of books. Deciaion as to title. Trial of issue. Appeal. Jurisdiction of Courts not affefted. Costs. Without sufficient '■aiise is made or unnecessary delay takes place in entering therein the fact of any person having ceased to be a shareholder or member of the corporation, the person or shareholder or member ag- grieved, or any shareholder or member of the corporation, or the corporation itself, may apply to the Supreme Court, for an order that the book or books be rectified, and tlie Court may either refuse such application or may make an order for the rectification of the book and may direct the corporation to pay any damages the party aggrieved may have sustained. (2) The Court may, in any proceeding under this section, decide any (|iK'stioii relating to the title of any person who is a party to such ])roceedings to have liis name entered in or omitted from such books, whether such (juestion arises between two or more shareholders, or alleged shareholders, or members, or between auy .shareholder or alleged shareholdei' or member and the corporation, and the Court may in any such proceeding decide any question which it may be necessary or expedi- ent to decide for the rectification of the books. (3) The Court may direct an issue to be tried. (4) An appeal sliall lie from the decision of the Court as if the same had been given in an action. (5) This .section shall not deprive any Coui't of any juris- dicticm it may otherwise have. (6) The costs of any proceeding under this section shall be in the discretion of llie Court. 2 Ceo. V. c. 31, s. 119. See Imperial Companies (Consolidation) Act, 1908, s. 32 and Buckley, 9th ed., pp. 84 ff. Sections H8, 119 and 121 are not to be invoked ex- cept in a reasonably clear case : lie Gramm Motor Truck Co. of Canada and Benncti (1915-6), ,3.5 0. L. R. 224. Where a person is induced by fraud to become a shareholder and is registered as such, the entry of his name is without sufficient cause. See the notes to s. 43 DEFAULT, ETC. " 655 of the Dominion Act, supra, under ** Rescission" at Sect. 121. page 195. ~ In Lorsch v. Shamrock Consolidated (1917), 39 (3. L. R. 315, an order was made under the section direct- ing registration. The section does not enable the court to relieve a shareholder declared to be such in the charter : Re J. A. French S Co., Ltd. (1909-10), 1 0. W. N. 864; but in the same case on appeal, the Divisional Court per- mitted rectification of the register by reducing the ap- plicant 's holding to one share: (1910-11), 2 0. W. N. 498. The directors should confirm unobjectionable trans- i>«'i':iet stating whether or not their requirements as "" ''-'•'*"■ " auditors liavo been complied with, and shall make a report to tlic shareholders or members on the accounts examined by tbern, and on every balance .sheet laid before the corporation in gen- eral meeting during their tenure of office: and in every such D.C.A. — 42 (JnS ONTARIO COMrANIES ACT. Sect. 134. i-ri>ort sluill staio wIumIicj-, in tluMf t)|iiiiioii. tlie balance shoot Tct'errod to in the report is properly drawn up so as to exhibit a true and correct view of the state of the corporation's affairs as shown hv its books. See Dominion Act, s. 9-tB (2). KeaUiug :it general meeting. (3) Such report shall be read at the general moeting. Geo. V. c. 31, s. 133. See Dominion Act, s. 105 (2) (c). PAET X. MISCELLANEOUS. Annual l^S- Subject matter: — .siinunary. Annual summar}' of the affairs of the company. See Dominion Act, s. 106. Every corporation is required before February J st of each year to make out a summary as of December 31st next preceding, containing the particulars pre- scribed in the section. Full instructions for the pre- paration and filing of the report, and posting up in the company's office, are contained in the blank forms ob- tainable from the Department. The summary must be transmitted to the Provin- cial Secretary on or before February 8th next after the time when it must be made (sub-sec. 5). The corporation need not comply with the section in the calendar year in which it was organized or went into operation, whichever first happened. In Seagram v. Pneuma Tubes, Ltd. (1918), 43 0. L. R. 513, the secretary, as well as the company, was held liable for penalties incurred under the section, the con- duct of the secretary having shown that he wilfully permitted the default. This case applied and, fol- lowed Park V. Laivton (1911), 1 K. B. 588. See also Seagram v. Pneuma Tubes, Ltd. ( 1 91 7 ) , 40 O. L. R. 30 1 . Return to 136. Every comipany i^hall make a return to the Provincial Secretary^ Secretary from time to time, as the same occur, of all chan.s^es of change among tho diroftnr?. and shall incur a penalty, not exceeding of directors, etc. EETUENS. 659 $20 for cverv contra ventioii of tlii-- n. 2 Geo. V. c. 31, !:ect. 136. s. 135.- ' ■ ■ No form is prescribed but the return should state the date of retirement, death, removal, etc., the date of election of the new directors and the correct names of the directors named therein. 137. The Provincial Secretary may, whenever he sees fit, Return may require a corporation to make a return upon any subject con- upoQ^*^,uv*^ nected with its affairs, and the corporation shall make the return subject. " within the time mentioned in the notice requiring the same. 2 Geo. V. c. 31, s. 132. 138. Subject matter:— (1) Fees on letters patent, etc., to be fixed by Order-in- Council. (2) Fees u)ay vary in amount. (3) Eestriction. See Dominion Act, s. 24. The following arc the Departmental regulations and instructions with regard to fees. Fees for Incorporation of Companies and Filings under the Ontario Companies Act; for Licenses under the Extra Provincial Corporations Act and for Licenses in Mortmain. 1. Fees nmst accomijany all application.s and all Depnrt- documents to be filed. Where the fee does not accom- J^^.^"^"' pany a document to be filed such document will be re- turned to the sender forthwith. Vide Sections 138 and 139 of TIi(( Oiilju'io Companies Act. 2. No cheque will ho ncceptcd unless it is marked. 3. Cash }i()l rcf/istered is at tlie risk of the sender. 4. i'ost office orders, postal iioti's, cluMjUes and drafts should l)e payable to the order of the Prorinri(d. . Treasurer. The following schedule of fees shall be jiayable for the various services rendered by the l)('i)artmeut undci* the provisions of Tlie Ontario Companies Act and P]xtra Provincial Corporations Ad ; (i(U) ON'l'AKIO CO.AIPA^'IES ACT. Sect. 138. Incorporaton with Share Capital. ivpart- AVheii the proi)osL'd capital of an api)licaiit coin- ivos. "^ pany is $40,000 or less, the fee shall be $100. . When the proposed capital is more than $40,000, but does not exceed $100,000, the fee shall be $100 and $1 for every $1,000 or fractional part thereof in excess of $40,000. When the proposed capital is more than $100,000, but does not exceed $1,000,000, tiie fee shall be $160 and $2.50 for every $10,000 or fractional part thereof in excess of $100,000. When the proposed capital is more than $1,000,000 the fee shall be for $385 for the first $1,000,000 and $2.50 for every $10,000 or fractional part thereof in excess of $1,000,000. Rural telephone companies, and other rural com- panies coming within the provisions of Part XII. of The Ontario Companies Act, where the proposed capi- tal does not exceed $25,000— $25.00. Where the proposed capital is more than $25,000 the fee shall be on the same scale as that applying to ordinary share capital companies. Rural cemetery companies, rural cheese and butter companies, and other rural companies of a similar na- ture where the proposed capital does not exceed $10,000 —$10.00. Co-operative companies w^here the proposed capital does not exceed $10,000— $10.00. Where the capital of a company of the classes in the two next preceding paragraphs referred to exceeds $10,000, but does not exceed $25,000, the fee shall be $10 and $1 for every $1,000 or fractional part thereof in excess of $10,000. To take advantage of this special tariff it must be demonstrated to the satisfaction of the Department that the purposes for which the company is being incorporated bring it within the classes re- ferred to. Supplementary Letters Patent. AVhere the capital of a company is increased, the fee shall be according to the foregoing list, hut on the DEPARTMENTAL FEES. 661 increase only. No fee previously paid is taken into Sect. 138. account. Where the capital is not increased the fee shall be $100.00. Where the fee payable for incorporation is $25.00 Depart- or less, the fee for Supplementary Letters Patent, J^^^^'^^ where the authorized capital is not increased in excess of $25,000, shall be $5.00. Amalgamation. Fees are payable on the same basis as for incorpor- ation. Orders. Changing- the name of a company $25 00 Accepting the surrender of a charter 20 00 Accepting the surrender of a charter where the fee payable for incorporation is $25 or less V 5 00 Accepting the surrender of a charter of a cor- poration without share capital 5 00 Permitting a company to keep its books out of the Province 50 00 Approving by-law authorizing distribution of assets 10 00 Approving by-law under Sec. 162, and filings thereunder • • • 2 00 Certificate. Certificate under Part VIII. of The Ontario Companies Act and filing of necessary documents thereunder $25 00 Certificate where fee payable for incorpora- tion is $25.00 or less 5 00 FiLTXf! Fkks. Prospectus $2 00 Statement in li(;ii of prosfjoctus 2 00 Return of allotment (where the conipnny lias not obtained a certificate entitling it to commence business) 2 00 r. ''<>- ONTARIO COMrANIES ACT. Sect. 138. Report for statutory meeting : $2 00 'r,...^. By-law providing- for sale of shares at a dis- ;.'";"f»^i count ; 5 00 By-law varying number of directors 2 00 By-law changing- head office ". 2 00 By-law fixing quorum of' directors 2 00 Notice of resolution passed for winding-u]). . 2 00 Liquidator's report on winding-up •. 2 00 Filing duplicate original mortgage under Sec. 82 (2) 2 00 Filing power of attorney 2 00 Filing- annual statement of a company having a capital under $50,000 2 00 Filing- the annual statement of a company hav- ing a capital of $50,000, and less than $100,000 3 00 Filing the annual statement of a company having a capital of $100,000 and less than $1,000,000 5 00 Filing the annual statement of a company hav- ing a share capital of $1,000,000 or over . 10 00 Incorporation Without Share Capital. Charitable corporations and trusts of a simi- lar nature $5 00 War Charities No fee All other incorporations without share capital 10 00 Supplementary Letters Patent 5 00 Change of name 5 00 Surrender 5 00 Filing annual statement 1 00 Extra-Provincial Corporations. Fees for licenses to Extra-Provincial Corporations are the same as for incorporation of companies under the Act, but are based on the amount of capital to be used in Ontario. License in Mortmain, When the authorized capital of an applicant cor- poration is $40,000 or less the fee shall be $100. DEPARTMENTAL FEES. 663 When the authorized capital is more than $40,000, Sect. 13: but does not exceed $100,000, the fee shall be $100 and^j,,,!- $1 for every $1,000 or fractional part thereof in excess mental of $40,000. ' AVhen the authorized capital is more than $100,000, but does.not exceed $1,000,000, the fee shall be $160 and $2.50 for every $10,000 or fractional part thereof in excess of $100,000. AVhen the authorized capital is more than $1,000,000 the fee shall be $385 for the first $1,000,000 and $2.50 for every $10,000 or fractional part thereof in excess of $100,000'. StJPPLEMENTAEY LiCENSE. Where the capital of an Extra-Provincial Corpora- tion ;s increased the fee shall be the same as for the incorporation of companies under the Act, but shall be - based only on the amount of the increase to be used in Ontario. No fee previously paid is taken into ac- count. Varying powers authorized by original Li- cense, where capital is not increased. . . . $100 00 Changing the name of an Extra-Provincial Corporation 10 00 Filing the annual statement of an extra-pro- vincial corporation with any capital up to and including $100,000 5 00 Filing the annual statement of an extra-pro- vincial corporation with any capital ex- ceeding $100,000 10 00 Searches. Search of returns, one year $0 25 And so on, adding for each year, 10c. Searching returns, two years 3o Searcliing returns, three years 45 Search by mail, additional 25 Copying, uncertified, per folio 08 Copying, certified, per folio ^0 Certificate, additional ^0 Fee for copy of Letters Patent 2 50 664- ONTARIO COMPANIES ACT. Sect. 138. Fee for copy of The Ontario Companies Act in pamphlet form $0 50 No com- plianco witli Act to tile returns, etc. without iKiy- ment of fees. Evidenee of by-laws. 139. No tender or traiisinission of any return, by-law or other document shall be a due compliance with the provisions of this Act unless and until the prescribed fee for receiving and filing the saiuo has been paid to and has been accepted by the Provincial Secretary. 2 Ceo. V. c. 31, s. 137, 140. A copy of any by-law of a corporation under its seal and purporting to be signed by any officer of the corporation or a certificate, similarly authenticated, to the effect that a person is a shareholder or member of the corporation, and that dues or other sums payable are due and have not been paid or that a call or assessment has been made, is due and has not been paid, shall be received as prima facie evidence of the hy-law or of the statements contained in such certificate in all Courts. 3 Geo. V. c. 31, s. 138. See Dominion Act, s. 109. Authentica- 141. A document or proceeding requiring authentication by mons^and"™" a corporation may be signed by any director, manager or other notices. authorized officer of the corporation, and need not be under its seal. 2 Geo. V. c. 31, s. 139. Service of notices. 142. A notice or demand to be served or made by a corpora- tion upon a shareholder or member may be served or made either personally or by registered post, addressed to the share- holder or member at his place of abode as it last appeared on the books of the corporation. 2 Geo. V. c. 31, s. 140. See Dominion Act, s. 97. 143. Subject matter : — Time of service. See Dominion Act, s. 98. Sanctioning 144. Any by-law by this Act requii'ing confi'rmfition by the s'^r'm'^^ ^^ - ^^'^^'<^^o^ders or members of the corporation may in liou of eon- sent of all firmation at a general meeting be confirmed by the consent in shareholders, writing of all the shareholders or members. 2 Geo. V. c. 31, s. 142. See Dominion Act, s. 48, which is limited to by-laws creating preference stock. Proof of matters under this Act. 145. Proof of any matter which may be necessary to be made under this Act may be made by statutory declaration, affidavit, or deposition before the Provincial Secretary, or any officer to whom the matter may be referred by him, or before any person authorized to take affidavits. 2 Geo. V. c. 31, s 143. See Dominion Act, s. 112. MINING COMPANIES. 665 PAET XI. Sect. 146. MINING COMPANIES. 146. A mining company incorporated before the first day Issuing of July, 190?, or thereafter incorporated nnder The Ontario Ijs^c'cSnL '' Companies Act (1907), or under The Ontano Companies Act (1912), or under this Act, and made by the T.etters Patent sub- J g^^^''- ject to the provisions of this Part, may issue its shares at a 2 Geo. V. discount or at other rate in the manner hereinafter prescribed. ^- ''^■ 2 Geo. V. c. 31, s. 144. 147. Xo sliaroholder of such company holdin.cr shares, issued Share- . , -. , 1-. , n T 11 e J. houlers not as liercin provided, shall be personally liable for nonpayment pe,.goually of anv calls made upon his shares beyond the amount agreed to liable for be paid therefor. 2 Geo. V. c. 31, s! 145. ^^"^• 148. Xo shares shall be issued at a discount unless author- By-law ized l)y a by-hiw of the company fixing and declaring the. rate ^^^^Jmr^zmg and any other terms and conditions of the issue, confirmed at a shares at a general meeting of tlie sharehohlers duly called for considering discount. the same. 2 Geo. V. c. 31, s. 146. 149. A copy of such by-law, within twenty-four hours after Verified copy the same has been confirmed, shall be transmitted by registered ^^ ^'^.^^^^"i ^" post to the Provincial Secretary, or be filed in his office witliin mittcd to five days, and such copy shall he verified as a true copy hy the g^";^^^!!'.!;!;*' joint affidavit of the president and secretary, and if there are no such officers, or they, or either of them, are, or is, at tlie proper time unable to make the same, by the affidavit of the president or secretary and one of the directors, or of two of the directors, as the case may require; and if the president or secre- tarv does not make or join in the afTidnvit tlie reason therefor shall be stated in the substituted affidavit. 2 Geo, Y. c. 31. s. 147. The petition for incorporation of a mining company should state that the company is to be made snhjecl to the provisions of this Part. The set terms of the intro- ductory objects clause of such a company supplied by the Department are as follows : '* {a) To acquire, own, lease, prospect for, open, ex- ^|;;;^";t«^. plorc, develop, woi-k, improve, maintain and manage mining mines and mineral lands and deposits, and to dig for, '•""'" > raise, crush, wash, smelt, assay, analyze, reduce, amal- gamate, refine, ])ipe, convey and otherwise treat ores, metals and minerals, whellier ludonging to the com- pany or not, and to render the same merchantalilc, and i.'iii \ (i()(i ONTARIO COMPANIES ACT. conipjiiiies Sect. 149. ti> sell or otherwise dispose of the same or any part thereof or interest therein; and {h) To take, acquire and hold as consideration for ores, metals or minerals sold or otherwise disposed of, or for goods supplied or for work done by contract or otherwise, shares, delx'ii- tures or other securities of or in any other company having objects similar in whole or in part to those of the con^Dany hereby incorporated, and to sell and otherwise dispose of the same." If the provisions of this section are not com- plied with, the liabilitj^ of the shareholder remains as it would be apart from the above provisions: Bank of Ottaivav. Jones (1919), 46 D. L. R. 407. For a discussion of the law as to issuing shares at a discount, see the notes to the Dominion Act, supra, at^ p. 235. What notice to ajipear on doeumeuts issued by company. 150. Every such coinipany shall have written or printed, im- mediately after or under its name, wherever such name is used by the compan}- or hy any director, officer, servant or employee thereof, and shall have engraved upon its seal the words " No Peesonal Liability " ; and upon every share certificate issued by the company, distinctly written or printed in red ink, where such share certifi'cJites are issued in respect of shares subject to call, the words " Subject to Call " ; or, if in respect to shares not suhject to call, the words " Not Subject to Call/' accord- ing to the fact. 2 Geo. V. c. 31, s. 148. Sale of 151- — (^ ) 111 the event of any call on shares of such a com- .shares on pany remaining unpaid by the holder thereof for a period of of'ca^is^™*^" sixty days after notice and demnnd of payment, such shares may he declared to be in default, and the secretary of the company may advertise such shares for sale at public auction Notice ^° ^^^' highest bidder for cash by giving notice of such sale of sale. in a newspaper published at the place where the principal office of the company is situate, or if no newspaper is pub- lished there, then in a newspaper published at the nearest -place to such office, once a week for four successive weeks. (2) The notice shall contain the numbers of the share cer- tificates in respect of such shares and the number of shares, the amount of the call or calls due and unpaid and the time and place of sale. Service (.3) In addition to the publication of the notice, it shall be 'publication 'P^i"Sonally served upon such shareholder or sent to him by regis- tered post addressed to him at his last known place of abode. Contents of. MINING COMPANIES. 667 (■i) If the holder of such shares fails to pa}' the amount due Sect. 151. thereon, with interest and the cost of advertising, before the ^7~^^ time fixed for such sale, the secretary shall proceed to sell the default of same, or such portion thereof as shall suffice to pay such calls payment, together with interest and the cost of advertising and of the sale. (5) If the price of the shares so sold exceeds the amount Surplus of • due with interest and costs, the excess shall be paid to the de- proceeds, faulting shareholder on demand. 2 Geo. V. c 31, s. 149. (6) In lieu of. proceeding to sell under the preceding sub- Action for sections, the company may maintain an action for the sale o f ^filf^.^*^^ o^ the shares in the Supreme Court and process in such action may non-payment be served upon a shareholder resident out of the jurisdiction of calls. in the same manner and subject to the same condition as process is permitted to be served out of the jurisdiction in cases provided for by the Consolidated Rules. (7) When there is any question raised as to the validity of Action to a call or as to the right to sell, an action may be brought in tlK> Jf^J^f^o^^gu Supreme Court for the purpose of determining the validity of " tlie call and the right to sell, and process in such action may he served on a shareholder resident out of the jurisdiction as provided in sub-section 6. 8. Geo. V. c. 20, s. 30. Section 151 was recently considered in Siipcridr Copper Co., Ltd. v. Perry and Sutton (1919), 17 0. W. N. 90. See also Superior Copper Co., Ltd. v. Perrij (1918), 42 0. L. R. 45; Superior Copper Co., Ltd. v. Perrij and Sutton (1918), 44 0. L. R. 24. 152. — (1) A company which nets in contravention ot\ any Penalty, provision of this Part, and every director, manager or officer thereof shall incur a penalty of $200. (2) A director or manage]' or officer wlio proves that he Relief from was not a party or privy to the act, and that when he became ppn'^i'ty. aware of it lie forthwith gave Jiotice thereof to the Provincial Secrejary, shall not be liablo to the peii;iltv impo?od by this section. " 2- Geo. V. c. 31. <. 1-50. PART XT. A. This part applies to co-operative c<)in]iaiiies, and <;"-'l'•''■"■ the topic not being one of crenernl mtei-cst, the sections ,,;,„i,.s;. are not set ont. (l(l8 » ONTARIO COMPANIES ACT. Partxn. I'Airr \ii. COMTANJES OPERATING MUNICIPAL FRANCHISES AND VU15LT0 UTILITIES. This part deals with public utility corporations. PART XIII. WINDING-UP OF COMPANIES. This part deals with the voluntary winding-up of companies and the winding-up of companies under order of the court. The sections follow the Imperial Act of 1908, ss. 182 and following. Up to the present time the provisions of this part have not been sufficiently made use of to warrant the sections being set out and annotated. For a discussion of the corresponding sections of the Imperial Act, see Buckley, 9th ed., pp. 1:18 and following. PART XIV. GENERAL PROVISIONS. Varying 207. — (1) The Lieutenant-Governor in Council may by Sup- oblTg'itions plementary Letters Patent, upon the appHcation of a corpora- of existing tion or of a shareholder, a creditor or a holder of bonds, del)en- corporations tures, debenture stock, or other securities or ohliofations thereof, afrectGd by i» o ? repeal of ^^' of any person with whom the corporation may have dealings, former relieve the corporation from any duty, obligation or other dis- enac men s. ability which may have been imposed, or may limit any right, power or other advantage which may have been conferred upon the corporation by the repeal of the general Act under which it c. .34^' ^^^ incorporated and by the enactment of The Ontario Com- 2 Geo. V. paniefi Ad (1907) or of Tha Ontario Companies Act (1912) or ''- 31- of this Act. Publication (^) N"otice shall thereupon be given, by the Provincial Sec- of the retary of such Supplementary Letters Patent in the Ontario ciange. Gazette, setting out the manner in which any such duty, obliga- tion or other disability has been relieved or in which such right, power or other advantage has been limited. 2 Geo. V. c. 31, s. 205. GENERAL, PROVISIOXS. 669 208. — (1) This Act, except in so far as it is otherwise ex- Sect. 208. pressly declared, shall apply to : J^:^{^^^n (a) Every company incorporated under any special or gen- of Act. eral Act of the Parliament of the late Province of Upper Canada; {b) Every company incorporated under any special or gen- eral Act of the Parliament of the late Province of Canada which has its head office and carries on busi- ness in Ontario, and which was incorporated with objects or purposes to which the authority of this Legislature extends ; (t) Every corporation incorporated under any of the Acts 7 Edw. VII. repealed by The Ontario Companies Act (1907), or'- ''^^■ imder any Act for which any of such repealed Acts was substituted or to which any of such Acts wa.> applicable; {d) Every company incorporated under a special Act to r.S.O. 1897, which any of the provisions of The Ontario Joint ^'- '^^^■ Stock Companies' General Clauses Act or any Act for which that was substituted was applicable ;_ (e) Every corporation incorporated under this Act or under 7 Edw. VII. The Ontario Companies Act (1907), or The Ontario %■ ^^-^ y Companies Act (1913). {See 2 Geo.- V. c. 17, s. 50.) c. 31.' (/) Every company incorporated under any general or Rev. Stat, special Act- of this Legislature except a company ^"^ 183- incorporated for the "con-struction and working of a railway, incline railway or street railway, the busi- ^^.y yt-^t. ness of insurance except as provided by The Ontario o. 184. Insurance Act, and the business of a corporation within the meaning of The Loan and Trust Corpora- tions Act, except as provided by that Act. (J) The Lieutenant-Governor in Council may relieve any Proviso. (•onii)any incorporated before the. first day of -hily, 1907, from coinpliance with any of the provisions of this Act. 8 (ieo. V. c. 31, .-. 20f). 209. Where not otlierwise provided the penalties imposed Kocovory of hy 0]' under the autliority of this Act shall be recoverable under '"^'"" ilic Ontario Summary Convictions Act. 2 Geo. V. c. 31, s. 207. U«-v. Stat. •^ 0. 5)0. 210. T-lvery corporation or company heretofore or hereaftei' (;,.i,(>ial cor- crealcd, " i"""'^ , (a) V>\ or under any .special or general Act ol the 1 arlia- ,.,.,tnin ment of the late Province of Upper Canada: .'..mpjinies. (h) Bv or under any special or general Act of tbo Parlia- ment (if the late Province of Canada, which has it>i head ofTice and carries on business in Ontario, and which was incorporated with objects or purposes to which the authoritv of this Legislature extends; (i(() 0>;rAlUO CUMrAJMlES ACT. Sect. 209. (' ) l^v or uiuku- any ol" the Acts repealed by The Ontario — Cotiipojiies Act, 1907, or under any Act for which any of such repealed Acts was substituted or to which any of suoli Acts was a|)|)iicable; ((/) By or under a Special Act to wbidi an.\- of the Ti'o- visions of The Ontario Joint K>toc/>- C'Oinpanies Gen- eral Clauses Act or any Act for wliich that was sub- stituted were applicable. ('') Hy or uud(;r any general or Special .Act of this Legis- lature, shall, unless otherwise expressly declared in the Act or Instru- ment creating it, have, and be decnved from its creation to have had, tlie general capacity whicli the Common Law ordin- arily attaches to corporations created by Charter. 6 Geo. V. c. 35, s. 6. Sub-section (e) was considered in Diebel v. Strat- ford Improvement Co. (1916), 37 0. L. R. 492. In the same case on appeal in (1916-17), 38 0. L. R. 407, no opinion was expressed on tlie sub-section. See also Edtvards v. Blackmore (1918), 42 0. L. R. 105, and the notes to ss. 28 and 29 of the Dominion Act, supra, at page 91. SCHEDULE. Forms. Forms 1, Petition for incorporation with share capital ; 2, Memorandum of agreement and stock book ; and 3, Petition for incorporation without share capital are obtainable from the Department. In the case of incorporation without share capital, it will usually be found convenient to filo a memorandum of agreement excluding the ^statutory Form 4. The Department supplies a short form excluding the statutory provi- sions. Form 5. Statement in lieu of prospectus is obtain- able from the Department. There is no Departmental form of prospectus, but the Department supplies the form of statutory declara- tion required under section 114 (1) (c). The statutory form of proxy, Form 6, is as follows : INSTRUMENT OF PROXY. 671 Instrument of Proxy. Schedule. {Section 51 (4)). Compaiiv, Limited, I, of a shareholder of Company, Limited, hereby appoint of {naming the proxy) as my proxy to vote for me and on my behalf at the meeting of the company, to be held on the day of , ^9 , and at any adjournment thereof. Dated this day of , 19 . Note.— (1) Where the appointor is a corporation or an officer of it the necessary changes must be made in the form. (2) Where the instrument is signed by a corpora- tion its common seal must be affixed. 2 Geo. V. c. 31, Form 6. The following are the Departmental instructions as to licenses in mortmain under the Mortmain and Chari- table Uses Act; as to licenses to extra-provincial cor- porations and as to obtaining supplementary license increasing capital to be used in Ontario, under the Ontnrio Kxtra-Provincial Corporations Act. Licenses in Mortmain. Under the provisions of The Mortmain and Cliari- Depart- table Uses Act land shall not be assured to or for .the ",",!,"j4\^ons' benefit of, or acquired by or on behalf of any corpora- tion ill mortmain, otherwise than under the authority of a license from His Majesty, or of a statute for the time l)eing in force, and if any hind is so assured, other- wise than as aforesaid, the land shall be forfeited to His Majesty from the date of the assurance, and His Majesty may enter on and liold the land accordingly. The Lieutenant-Governor in Council, if and when, and in sueli foiin as he thinks fit, may grant to air -on main. 67- MORTMAIN AND CHAIUTAHLE USES ACT. i>tpart- or corporation a license to assure land in mortmain in strliedons" pei'petuity or otherwise, and may grant to any cor- tor .lilt tin- poration a license to acquire land in mortmain, and to in inort- hold sucli land in perjx'tuity or otlierwise. The application must be by petition of the corpora- tion addressed to the Lieutenant-Governor in Council and executed by the proper officers of the corporation, under the corporate seal. This petition must state material facts, such as : — 1. The name of the Kingdom, Dominion, State, Pro- vince, or other jurisdiction, under the laws of which the applicant corporation was incorporated and is working ; 2. Its corporate name, which must not contain the words ''Loan," ''Mortgage," "Trust," "Trusts," ' ' Investment, " or " Guarantee ' ' ; 3. That the corporate name of the corporation is not on any public ground objectionable, and that it is not that of any known company, incorporated or un- incorporated, or of any partnership or individual do- ing business in Ontario, or a name under which any know^l business is being carried on in Ontario, or so nearly resembling the same as to deceive; 4. The date and manner of its incorporation ; 5. The place where its head office is situated; 6. Whether its existence is limited by statute or otherwise, and if so, the period of its existence yet to elapse, and whether its existence may be lawfully ex- tended ; 7. Whether it is a valid and subsisting corporation ; 8. Whether it has capacity to hold land, and if so, the conditions, if any, under which such land is to be held; 9. A description of the land which it desires to hold in Ontario ; 10. That the corporation has authorized the making of the application and has duly appointed an attorney for service of process. 11. The name in full, description and place of resi- dence of such Attorney ; and 12. Such further and other information as the Pro- vincial Secretary may require. LICEXSES IN MORTMAIX. 673 The contents of, the signatures to, and the impres- sion of the corporate seal upon the petition, must be verified by affidavit or statutory declaration. If the application be on behalf of a corporation in- corporated under the laws of the Dominion of Canada, a copy of its Letters Patent, or of the Act incorpor- ating it, certified by the Deputy Registrar-General or by the Clerk of the Parliaments, respectively, must be produced with the application. A similar observation will apply to a corporation incorporated under the laws of any of the Provinces of the Dominion of Canada, regard being had to the proper officers in that behalf for the purposes of certification. If the application be on behalf of a corporation in- corporated under the laws of Great Britain and Ire- land, the copy of the Memorandum and Articles of As- sociation produced must be certified tc be a true copy by the Registrar of Joint Stock Companies at London, Edinburgh, or Dublin, as the case may be. If the application be on behalf of a corporation in- corporated under the laws of one of the United States of America, the evidence of incorporation must consist of a duly certified copy of the papers originally and (if any) subsequently filed in the Department of the Secre- tary of State, or other proper officer having the cus- tody of the papers, and duly verified l)y such officer. There should also be evidence that the copies of the creating instruments filed, or of amendments thereto, are true and correct copies of all records af- fecting tlie status of the company or varying tlx' Ici-ms of its original incorporation. A person resident in Ontario, or a company iiaviiig its head office in tiie Province, must be appointed by the applicant corporation to be its Attorney and vvyn'o- sentative in Ontario, and a Power of Attorney duly executed for the purpose under the seal of (lie corpora- tion must be transmitted witli tho. pa[)ers. This is rcfiuired even when tlit; corporation is iiicorponiled under the laws of the Dominion, and has its he.'id office in Ontario. The power itself iti;n- '••Mif.-iin ;niy provi- n.c.A.— jn (l74 MORTMAIN AND CHARITABLE USES ACT. i.i.tnsos in sioiis iiol iiicoiiyistoiit with the duties of the Attorney Depart- t<^ t)e exercised under the kiws of the Province, but SctiVns ^^ must include words expressly authorizing the At- torney : — "To act as such, and to sue and be sued, i)lead and be impleaded in any Court in Ontario, and gen- erally on behalf of the corporation and Avithin Ontario, to accept service of process, and to receive all lawful notices, and, for the purposes of the corporation to do all acts and to execute all deeds and other instruments relating to the matters within the scope of the Power of At- torney. ' ' The power must also provide that until due law- ful notice of the appointment of another and subse- quent attorney has been given to and accepted by the Provincial Secretary, service of process or of papers and notices upon the person or company mentioned in the original or other power last filed with the Pro- vincial Secretary shall be accepted by the applicant corporation as sufficient service in the premises. The consent of the Attorney to act as such, with an affidavit or declaration verifying the execution of the same, must be filed. Fees. When the authorized capital of an applicant cor- poration is $40,000 or less, the fee shall be $1 00 ; When the authorized capital is more than $40,000, but does not exceed $100,000, the fee shall be; $100 and $1 for every $1,000 or fractional part thereof in excess of $40,000; When the authorized capital is more than $100,000, but does not exceed $1,000,000, the fee shall be $160 and $2.50 for every $10,000 or fractional part thereof in excess of $100,000 ; When the authorized capital is more than $1,000,000 the fee shall be $385 for the first $1,000,000 and $2.50 for every $10,000 or fractional part thereof in excess of $1,000,000. EXTRA-PROVINCIAL CORPORATIONS. 675 Licenses to Extra-Provincial Corporations. The application must be by petition of the cor- Depart- poration addressed to the Lieutenant-Governor in ™rCSions." Council and executed by the proper officers of the cor- poration under the corporate seal. The petition must state material facts, such as : — 1. The name of the Kingdom, Dominion, State, Province or other jurisdiction under the laws of which the applicant corporation was incorporated and is working; 2. Its corporate name, which must not contain the words ''Loan," ''Mortgage," "Trust," "Trusts," "Investment" or "Guarantee" in connection or in combination with any of the words " Corporation," "Company," "Association," or "Society," or in com- bination or connection with anj similar collective term, nor the word "Imperial," or other title signifying Royal or Government support or jDatronage, such as "Crown," "King's," "Queen's," etc., unless there is some real Imperial Crown connection which gives a well-founded claim to recognition, and unless it can bo shown on clear evidence that there is a long and bona fide user, and that the name is so used as not to con- vey any suggestion of Government support or patron- age; 3. That the corporate name is not objectionaljle upon any public ground, and that it is not that of any known corporation or association, incorporated or un- incorporated, or of any partnership or individual do- ing business in Ontario, or a name under which any known business is being carried on in Ontario, or so nearly resembling the same as to deceive; 4. The date and manner of its incorporation; 5. Tlie place where its head office is situated; (i. W'iicliicr its existence is limited by Slatute or otherwise, and if so, the period of its existence yet to elapse, and whether its existence mny l»e lawfully ex- tended ; 7. Whether it is a valid and subsisting corporal idi ; ^u6 ONT.VEIO EXTRA-PROVINCIAL CORPORATIONS ACT. ivpart- ^, Whether it has capacity to hokl hiiid, and ii' so, iiuMit;u ill- ... X ,/ } 7 -siiiutii.iis the conditions, it anv, under which such hind is to be hekl; \). AVhetlier it has capacity to carry on l)usiness in Ontario; 10. Its authorized powers set out in full ; 11. The powers which it desires to exercise in On- tario ; 12. The amount of its authorized capital, and whether such capital is divided into shares, and if so, how; 13. The amount of its subscribed capital ; 14. The amount of its paid-up capital ; 15. The amount of capital which the corporation desires authority to use in Ontario; 16. Its head office, or other chief place of business in Ontario ; 17. The name, description and place of residence of its chief agent or representative in Ontario ; 18. That the corporation has authorized the mak- ing of the application and has duly appointed an at- torney for service of process ; 19. The name, description and place of residence of such attorney; and 20. Such further and other information as the Pro- vincial Secretary may require. The contents of, the signatures to, and the impres- sion of the corporate seal upon the petition must be verified by affidavit or statutory declaration. If the application be on behalf of a corporation in- corporated under the laws of any of the Provinces of the Dominion of Canada, a copy of its Letters Patent, certified by the Secretary of such Province or other proper 'officer having the custody of the papers, and duly verified by such officer, must be produced with the application. If the application be on behalf of a corporation in- corporated under the laws of Great Britain and Ire- land, the copy of the Memorandum of Articles of As- sociation produced must be certified to be a true copy EXTEA-PEOVINCIAL CORPORATIONS. 677 by the Registrar of Joint Stock Companies at London, Edinburgh or Dublin, as the case may be. If the application be on behalf of a corporation incorporated under the laws of one of the United States of America, the evidence of incorporation must consist of a duly certified copy of the papers originally and (if any) subsequently filed in the Department of the Secretary of State, or other proper officer having the custody of the papers, and duly verified by such officer. Evidence should be filed that the copies of the creat- ing instruments filed, or of amendments thereto, are true and correct copies of all records affecting the status of the corporation or varying the terms of its original incorporation. A person resident in Ontario, or a company having its head office in the Province, must be appointed by the applicant corporation to be its attorney and repre- sentative in Ontario, and a power of attorney duly exe- cuted for the purpose under the seal of the corpora- tion must be transmitted with the papers. This is required even when the corporation is incorporated under the laws of the Dominion, and has its head office in Ontario. The power itself may contain any pro- visions not inconsistent with the duties of the attorney to be exercised under the laws of the Province ; but it must include words expressly authorizing the attor- ney ; "To act as such, and to sue and be sued, plead and be impleaded in any Coui't in Ontario, and gen- erally on belialf of tlic corporation and williiii Ontario to accept service of process, and to re- ceive all lawfnl notices, and, for tiie i)uri)oses of tile coi'))oratioii to do all acts, and to execute all deeds and other inst rnin<'nts i-elating to the matters within the scope of llie power of at- torney." The powei" ol" attorney must also pro\ide that until due lawful notice of the api)ointment of another and subsequent attorney has been given to (uiil arrrpfrd by the Provincial Secretary, service nT process or of ()<8 ONTAKK) EXTRA-PROVINCIAL CDUPOUA TlOiSlS ACT. papers and notices upon the person or company men- tioned in the original or other power hist filed with, the Provincial Secretary shall be accepted by the ap- plicant corporation as suflficient service in the premises. The consent of the attorney to act as such, with an affidavit or declaration verifying the execution of the same, must be filed. mental in structions Memorandum Outlining- Procedure for Supplementary License Increasing Capital to be used in Ontario. Depart- The application must be by petition to the Lieu- tenant-Governor in Council, executed by the corpora- tion under its corporate seal. This petition should state material facts, such as: 1. The name of the State under the laws of which the corporation was incorporated, and is working; 2. Whether it is a valid and subsisting corpora- tion ; 3. The date of its license to carry on business in the Province of Ontario ; 4. The amount of capital which the corporation is authorized to use in Ontario. 5. Its head office or other chief place of business in Ontario ; 6. The additional amount of capital which the com- pany desires to be empowered to use in Ontario. 7. The extended powers which the corporation de- sires to exercise in Ontario; 8. That the status of the corporation has not changed since the original license was granted. If the corporate status has been altered, then a certified copy of the amendments filed in the Department of the Secretary of State, or other proper office having cus- tody of the papers, and duly verified by such officer, should be filed with the petition. The contents of, the signatures to, and the impres- sion of the seal upon the petition, must be verified by affidavit. DOMINION WINDING-UP ACT. 679 DOMINION WINDING-UP ACT. ,gect. 1. R. S. C. (1906) CHAPTER 144. An Act respecting Insolvent Banks, Insurance Com- panies, Loan Companies, Building Societies, and Trading Corporations. Short Title. 1. This Act may be cited as the Winding-up Act, E. S., Siiort title, c. 129, s. 1. This Act is intra vires of the Dominion Parliament, being in the nature of an insolvency law: Shoolbred v. Clark (1890) 17 S. C. R. 265; and the Dominion Par- liament is alone competent to enact such legislation: B. N. A. Act, s. 91, No. 21. ■ See A.-G. for Dominion of Canada v. A.-G. for Province of Ontario (1898), A. C. 700, at p. 715. Provincial legislation affecting insol- vent persons and corporations is valid as falling un- der the heading ''Property and Civil Rights," even though of such a nature that it would be a suitable ancillary provision to a bankruptcy law, provided it does not come within s. 91 of the B. N. A. Act : A.-G. of Canada v. A.-G. of Ontario (1894), A. C. 189. A pro\ancial Act passed to relieve a particular society which is shown on the face of the Act to be in a state of financial embarrassment, is intra vires as coming within s. 92: L'Union St. Jacques v. Brllsle (1874-5), L. R. 6 P. C. Appeals 31. It has been held that a provincial statute providing for the sale of provincially subsidized railway when it is insolvent or has not complied Avitli its charter or ceases to carry on its undertaking, applies to a c(»ni- pany which is subjected to the legislative jurisdiction of the Dominion: Baie des Chaleurs v. Nantel (1896), Q. R. 9 S. C. 47; (1896) Q. R. 5 Q. B. 64. THE BANKRUPTCY ACT. The Bankruptcy Act passed in 1919 and l)oing chap- ter 36 of the Dominion statutes of fliat year, is to go into force on July ], 1920. tiSO DOMINION WINDING-UP ACT. Sect. 1. The now Act is made applical)le to corporations, ^ — . . , . ." exceptiiiii- bnildiiio- societies liaviii£>- a capital stock, in- Act. ■ corporated banks, insurance companies, trust com- panies, loan companies or railway companies (s. 2 (k)). Companies of the foregoing classes will continue to be subject to the Winding-up Act and not to the Bank- ruptcy Act. As regards other companies the Bank- ruptcy Act provides (s. 2 (o)), that the Winding-up Act shall not apply; but all proceedings instituted under the Winding-up Act before the Bankruptcy Act comes into force are to be continued under the Wind- ing-up Act. The intention of the framers of the Bankruptcy Act apparently is that the machinery for the liquidation of insolvent companies under the Act is to be provided by General Rules made pursuant thereto. And section 6(3, sub-sec. (2) of the Bankruptcy Act provides as follows : — 'Such rules shall not extend to the jurisdiction of the court, save and except that, for the purpose of en- abling the provision of rules having application to cor- porations, but for such purposes only, the Winding-up Act, chapter 144 of the Revised Statutes of Canada, shall be deemed part of this Act. ' The Winding-up Act furthermore remains in full force and is applicable for the winding-up of companies subject to its provisions on grounds other than insol- vency. Interpretation. Definitions. 2. In this Act, unless the context otherwise requires, — ' Minister.' (*) ' Minister ' means the Minister of Finance ; -roinnanv" (^) 'company' inchides any corporation sul)joct to tlie pro- visions of this Act; 'Insurance (c) 'insurance company' means a conipjiiiy carrying on ;iny.' either as a mutual or stock compiiny, the lnisiiioss of insurance, whether life, fire, marine, ocean ov inland marine, accident, guarantee or otherwise ; ' Tniding (f^-) 'trading company' means any company, except a rail- fompsiny.' way or telegraph company, carrying on business similar to that carried on by apothecaries, auctioneers, hankers, brokers, brickmakers, builders, carpenters, carriers, cattle or sheep salesmen, coach proprietors, dyers, fullers, keepers of inns, taverns, hotels, saloons or coffee houses, INTERPRETATION. 681 lime burners, livery stable keepers, market gardeners, Sect. 2. millers, miners, packers, printers, quarrvmen, share '—^ brokers, ship-owners, shipuTights, stockbrokers, stock- jobbers, victuallers, warehousemen, wharfingers, persons using the trade of merchandise by way of bargaining, exchange, bartering, commission, consignment or other- wise, in gross or by retail, or by persons who, either for themselves, or as agents or factors for others, seek their living by buying and selling or buying and letting for hire goods or commodities, or by the manufacture, work- manship or the conversion of goods or commodities or trees ; (e) ' court ' means, 'Court.' (i) in the province of Ontario, the Supreme Court of Ontario (6 & 7 Geo. V., c. 5, s. 1). (ii) in the province of Quebec, the Superior Court, (iii) in the province of Nova Scotia, the Supreme Court, (iv) in the province of New Brunswick, the Supreme Court, (v) in the province of Manitoba, 1he Court of King's Bench, (vi) in the province of British Columbia, the Supreme Court, (vii) in the province of Prince Edward Island, the Supreme Court, (viii) in the province of Saskatchewan, the Supreme Court (9 «& 10 Ed. VII., c. 62, s. 1). (ix) in the province of Alberta, the Supreme Court (H & 10 Ed. YIL, c. 62, .s. 1). (x) in the Northwest I'erritories, such court or magis- trate or other judicial authority as is designated, froui time to time, by proclamation of the Governor in Council, published in the Canada Gazette, and (xi) in the Yukon Teri'itory, the Territorial Court: (/) 'official gazette' means the Canada Gazette and tlr 'oiliciai gazette published under llic authority of the goveriruient <»azette.' of the province where tlie proceedings for the winding-\ip of the l)upiness of the company are carried on, or used as the official means of cominunication between the Lieu- tenant-Governor ;iii(1 Ihe jx'ople, and if no sucii gazette is juiblished, then it means any newspaper published in the province, which is designated by the cour1 for ]Mil)]isl)ing the notic<'s re(|uired l)y this Act; {(1) ' contriliutory ' means' a person liable io coulribule to.,, . ., i-\ i. c 1 ii • A i. 1-11 Coutnhii- the assets ot a company under this Act; and, in all pro- tory." ceedings for determining ihe persons who are to bo deemed contribuiories and in all proceedings prior to the final detorminalion of such persons, it includes any per- son alleged to be a contributory ; ()82 DOMINION' W1NDIN(VFP ACT. Sect. 2. (/') * wiiieliiig-iip order' means an order granted by the ,. -' court under this Act to wind up the business of the eorn- iip onier/ Pi^^^.v? '1"^^ includes any order granted by the Court to bring within the provisions of this Act any company in liquidation or in process of being wound up; 'Capital (;■) • cnpiial slock' includes a capital stock de jure or de stock.' r J jacio : ' Creditor.' (./) ' creditor ' includes all persons having any claim against tlio company present or future, certain, ascertained, or contingent, for liquidated or unliquidated damages; and in all proceedings for determining the persons who are to be deemed creditors it shall include any person making any such claim. I?. S.,' c. 129, ss. 3, 33, ^6 and 61; 62-63 v.. c. 43 s. 5. ConipnH^-. (b) The Act is valid as regards an insolvent pro- vincial company: Shoolbred v. Clark, [1890] 17 S. C. R. 265; or a foreign company: Allen v. Hanson (1890), 18 S. C. R. 667. See further notes to s. 6. Trading (d) In ascertaining whether a company is a 'trad- company. .^^^ company' apparently it is sufficient if any of the objects bring it within the sub-section: Re Lake Win- nipeg, dc, Co. (1891), 7 Man. L. R. 255, at p. 259; Re Canadian General Service Corporation (1914), 16 D. L. R. 15. Whether the company has actually exer- cised the powers which bring it within the definition is immaterial: Re Anchor Investment Co. (1912), 7 D. L. R. 915. Under the term 'trading company' will be included a gas manufacturing company: Delorimer v. Canadian Gas S Oil (1908), Q. R. 34 S. C. 381; but not a social club: Re Montreal City Club (1895), 8 R. J. Q. (S.C.) 527 ; Re St. James Club (1852), 2 D. M. & G. 383 ; nor a literary society: Re British Athenaeum (1890), 43 Ch. D. 236. Court. (e) In Quebec 'The Superior Court' means the court for the district where the head office of the com- pany is situate: Dupont v. Compagnie de Moulin (1885), 11 L.N. 225. The jurisdiction of the court is analogous to the jurisdiction in administration actions : Stringer's Case (1869), L. R. 4 Ch. 493; Ranee's Case (1871), L. R. 6 Ch. 104. IXTEEPRETATION. " 683 A local judge of the Supreme Court in British Col- Sect. 2. umbia has no jurisdiction to make a winding-up order under the Act: Re Kootenay Brewing Go. (1900), 7 B. C. R. 131. The decisions under the Act in one province are not binding on the Courts of another province : Re Ce7itral Bank (1888), 30 C. L. T. 271. (g) The definition of the term contributory in this Contribu- section is taken from the Imperial Companies Act, *^'"^'" 1862, s. 74. It does not include a mere debtor who is a stranger to the company, but only a shareholder or member: In re Central Bank, Yorke's Case (1888), 15 0. R. 625. This limitation on the meaning of the term 'contributory' is apparent from other sections of the Act, e.g., 51, 52, 60, 61 and 62. Section 51 providing for the liability of contributories is limited in its application to the liability of a member or shareholder in his character as such. Thus a holder of bonus shares, who has transferred them to a person who has been accepted by the company as transferee and who is entitled to hold them as fully paid, is not liable to be placed on the list of contributories so as to bo liable to contribute qua shareholder: In re Wiarton Beet Root Sugar Com.imny (1906), 12 0. L. R. 149; In re Winnipeg Hedge Wire Fence Company, Limited (1912), 1 D. L. R. 316. In the first mentioned case it was held, however, that if the transferor was a director he would be liable for breach of trust if he was a party 1o the allotment of the shares fully paid, and also for transferring them as fully paid shares to the pre- judice of the company, and was caught by s. 123: In Rr Winnipeg Hedge Wire Fence Company, Limited sui)ra, Robson, J., at p. 323, expressed the view that s. 123 could not be invoked on an application to settle a list of confributories. Sec ;ils() the following cases: — Tillsonhnrg Agri- cultural Co. V. Goderich, (1885), 8 0. R. 565; In re London Speaker Co. (1889), 16 A. R. 508; 7,V^ Standard Fire Insurance Co. (1885), 7 0. R. 448, 12 S. C. R. 644; Re Cole S Canada Fire and Marine Insurance Co. (1885), 8 O. R. 92. ()84 Sect. 2. Company ileemetl iusolvent, when- When company deemed in- solvent. Unable to pay its debts. DOMINION' WINL)lN(i-Ur ACT. A sliaroliolder may be placed on the list of contri- "butories even tliongli lie has paid for his shares in full; In re Aii(/lesea Colliery Co. (1886), L. R. 1 Cli. 555, followed in Re Monarch Bank of Canada, (1914), 32 0. L. R. 213, where a fully paid subscriber was placed on the list for the purpose of entitling him to claim in the distribution of the surplus remaining after the creditors of the bank had been paid. 3. A coiiiiiiiny is deemed insolvent, — (a) if it is unable to pay its debts as they become due; (h) if it calls a meetino^ of its creditors for tlie purpose of compounding vvitli them; (c) if it exhibits a statement showing its inability to meet its liabilities; (d) if it has otherwise acknowledged its insolvency; (e) if it assigns, removes or disposes of, or attempts or is about to assign, remove or. dispose of, any of its property, witli intent to defraud, defeat or delay its creditors, or any of them ; (/) if with such intent, it has procured its money, goods, chattels, land or property to be seized, levied on or taken under or by any process of execution ; (g) if it has made any general conveyance or assignment of its property for the benefit of its creditors or if, being unable to meet its liabilities in full, it makes any sale or^ conveyance of tlic whole or the main part of its stock in trade or assets, without the consent of its creditors, or without satisfying their claims; or, (h) if it permits any execution issued against it, under which any of its goods, chattels, land or property are seized, levied upon or taken in execution, to remain unsat- isfied till within four days of the time fixed by the sheriff or proper officer for the sale thereof, or for fifteen days after such seizure. R. S., c. 129, s. 5. The provisions of ss. 3 and 4 of the Act are exclu- sive, and the petitioner must strictly prove the exist- ence of one or more of the circumstances there set forth or his petition will be dismissed: Re Rapid City Farmers' Elevator Co., (1894), 9 Man. R. 574. Sub-section (a). A creditors' winding-up petition is a mode of execution which the Court gives a creditor against a company unable to pay its debts : Re Company for WHEN COMPAXY DEEMED INSOLVENT. 685 General Promotion of Land Credit, (1870), L.R. 5 Cli. Sect. 3. 380; Re National Permanent Benefit Building Society, ex 2:>. Williamson, (1869), L. R. 5 Ch. 312. In ^lanitoba it lias been held by Taylor, C. J., that s. 3 (a) and s. 4 are to be read together, that s. 4 de- fines what ''unable to pay its debts" means, and that a ])etitioning creditor who seeks to show insol- vency within s. 3 (a) can only succeed by proceeding in the manner provided in s. 4 : Re Rapid City, Sc, Co., (1894), 9 Man. R. 574; i?e Qu'Appelle Valley Co., (1888) 5 ]\ran. R. 160; Re Catholic Publishing Co., (1864), 2 D. J. «& S. 116. The cases in Ontario are to the same effect: jRe Briton Medical (1886), 11 0. R. 478; In re Eivart Carriage Works Ltd.{\9Q^), 8 O.L.R. 527. In the last mentioned ca&,e the petitioner Avas given leave to amend, offer additional evidence and again present his petition within fourteen days. These cases have been followed in British Columbia; Re Anchor Investment, (1912), 7 D. L. R. 915; as to the province of New Bruns\\dck see In re dishing, (1904- 06), 37 N. B. R. 254 at p. 302. In Quebec it has been held that insolvency being- alleged in the petition the petitioning creditor is not compelled to prove that he demanded i)aynient from the company conformably to s. 4: McKay v. L' Associ- ation Coloyiiale de Construction (1884), 13 R. L. 383, (S.C.) But the petitioner must prove the insolvency otherwise: Eddy v. Henderson, 6 I\l. L. R. (S.C.) 137. Ill Quebec it has also been held that the service of a wiiidi]ig-up petition is equivalent to the service of a demand under s. 4; Alex Bremner, Ltd. v. Dominion Floor and Wall Tile Co. (1915), 17 Que. P. R. 278. Tbe English Courts have lield a Company unable to })ay its debts — Wiiere the comi)aiiy's acceptances wei'e dishon- oured. And no demand is required: In rr (llohc Nerv Patent Co. (1875), L. R. 20 Eq. 337. Where the creditor was told by com])any's solicitor there were no assets on which he could levy: He Flag- staff Co. (1875), L. R. 20 K^. 26S; /,'r Vatr Collieries (1883), W. N. 171. (JS() IKmiNlON \VlNI)lNti-Ur ACT. Sect. 3. "Unable to pay its debts" means iiial)ility to pay (.,^,,^1,,,,,^. — debts absolutely as they become due, that is debts un;>hieto which the creditor may demand to be paid instantly: S)ts!^ Uc European Life Assurance Society (18()9), 39 L. J. Ch. (N.S.) 324. This does not mean demanded but demandahle : Be Bristol Joint Stock Bank (1890) 38 W. R. 576. In Bapid City, Sc, Farmer's Elevator Co., (1894), 9 M. R. 576, Taylor C. J., distinguishes these cases on the ground that the Dominion Winding-up Act con- tains no clause corresponding to s. 80, s.-s. 4 of the English Companies Act (1862) ; cf. In re Etvart Car- riage Works, (1904), 8 0. L. R. at p. 528. But a company is not unable to pay its debts because it is carrying on a losing business if its assets exceed its liabilities: Be Joint Stock Coal Co. (1869), L. R. 8 Eq. 146: Re Spence's Patent Non-conducting Composition Co. (1869), L.R. 9 Eq. 9. But an allegation that a company is insolvent and unable to pay petitioners' debts is not a sufficient allegation within the meaning of s-s. (a) of this Act. Re Bapid City, Sc, Co. (1894), 9 Man. R. 574. Sub-section (b). Meeting of It will uot be inferred from a letter sent by a com- creditors. ^^^^^ ^^ ^ Creditor which merely stated "have repre- sentatives meet the creditors" at a certain time and place, that it was a meeting of the company's creditors for the purpose of compounding with them where there was no account in evidence of what took place at the meeting: Be Manitoba Commission Co. (1912), 2 D. L. R. 1. Sub-section (c). Kxhibitiiig This sub-section is intra vires of the Parliament st;.t..,n.nt. ^f Canada : Be Lake Winnipeg T. L. and T. Co. (1891 ), 7 Man. R. 255, 262. The liabilities referred to in the sub-section are those to creditors as distinguished from those to share- holders: United Commercial (1901-3), 9 B. C. R. 528; Be Great West Brick and Coal Co., Ltd. (1915-6), WHEN COMPANY DEEMED INSOL\"ENT. 687 9 Sask. L. R, 240. The statement exhibited must be Sect. 3. the company's statement. Thus where the company's president threw open the books of the company to an accountant employed by a creditor, and the account- ant made a report to the creditors showing the com- pany insolvent, these facts were held not to bring the company ^dthin the sub-section for the acts of the accountant were not those of the company: Re Mani- toba Commission Co. (1912), 2 D. L. R. 1. Where a petition is filed under the sub-section the statement must be taken as correct and can not be attacked bv the petitioner: United Commercial (1901- 3), 9 B. C.R. 528. Sub-section (d). As a matter of pleading where it is intended to otherwise rely upon an acknowledgment of insolvency such j^jJj^gg'Vj^ acknowledgment must be stated and set forth in the insolvency. petition: Re Rriton Medical Association (1886), 11 0. R. 478; see also In re Ewart Carriage Works (1904), 8 0. L. R. 527, 529. Insolvency is a condition in which a debtor is placed wlien he has not sufficient property subject to execution to pay all his debts if sold under legal process at a sale fairly and reasonably conducted: Dominion Bank v. Cowan (1888), .14 0. R. 465, 466. The acknowledg-ment must be 'some formal act of the directors or of the shareholders or of some officer expressly or impliedly authorized to make such an acknowled.gment on the company's behalf: Re Manitoba Commission Co. (1912), 2 D. T.. R. 1, per Mathers, C. J., at p. 7. It nmst be a corporate act: In re Atlas Canning Co. (1895-97), 5 B. C. R. 661. Tlius a resolution passed by the directors to the effect tliat the creditors be notified and requested to file claims with a liustee foi- pro rata payment followed by noti- fication to the creditors is sufficient: 7?^' Anchor Investmrnt Co. (1912), 7 D. L. R. 915. The fact that the company has not paid the debt, has allowed itself to be sued, judgment to be recov- ered and cxecntiou returned inilJa ho>ia, is not ;in (588 DOMINION WINDING-UP ACT. Sect. 3. Assigns, removes, etc., its property. Makes gorieral as.siKnment. a(.'kiiowled4»'inent of insolvency within the sub-section: He Qit'Appclle Valley Co. (1888), 5 Man. R. 160; nor are affidavits of the company's officers to the effect that the company is insolvent, not giving a statement of assets and liabilities, sufficient, ibid; see also Re Great West Brick S Coal Co. (1915-G), 9 Sask. L. R. 1240. Nor is failure to appear and oppose the petition enough: Re Lake Winrnpeg T. L. S T. Co. (1891), 7 Man. R. 255 ; nor admission by counsel, for the mater- ial filed must bring the case mthin the section: Re Grundy Stove Co. (1904), 7 0. L. R. 252. Where the insolvency was admitted the company was ordered to be wound up, though a voluntary assignment had previously been made : Re William Lamb Mfg. Co., (1900), 32 0. R. 243. Sub-section (e). A mnding-up petition, which alleges fraud, e.g., by promoters and directors, must state the facts which constitute the fraud though not the evidence. If there is only a vague general allegation of fraud e^ddence will not be admitted of particular acts of fraud: Re Rica Gold Washing Co. (1879), 11 Ch. D. 43. See also Re Qu'Appelle Valley Co. (1885), 5 M. R. 160, 164; and In re Ewart Carriage Works (1904) 8 0. L. R. 527. Wliere a company which had ceased operations and was so heavily indebted that it could have been put into insolvency, was proceeding to transfer its assets, against the will of dissentient shareholders and creditors, in consideration of the issue of paid- up shares of another company, it was held that the company was brouglit within sub-section (e) as being about to assign some of its property with intent to defraud and delav creditors : Calumet Metals v. El- dredge (1914), 17 D. L. R. 276. Sub-section (g). A company unable to meet its liabilities in full conveyed the main part of its assets to another com- pany without the consent of its creditors, and with- out satisfying their claims. Held, that a winding-up WHEX COMPANY DEEMED IXSOLVENT. 689 order might issue: Re Qu'Appelle Valley Co. (1888), Sect. 3. 5 Man. R, 160; Calumet Metals v. Eldredge (1914), " 17 D. L. R. 276. The fact that a company is in voluntary liquida- tion is prima fade evidence of insolvency: North- ampton V. Midland Co. (1878), 7 Ch. D. 500; Pure Spirit Co. v. Fowler (1895), 25 Q B. D. 235. The Court may, however, refuse an order in such a case : Re Strathy Wire Fence Co. (1904), 8 0. L. R. 186. In Manitoba it has been decided that a company cannot be deemed to be insolvent within the meaning of the Act because an execution has been returned nidla bona by a County Court bailiff : Re Rapid City, (&c. (1894), 9 M. R. 574; following Re Qu'Appelle Valley Co. (1888), 5 M. R. 160. Sub-section (h). In computing the time under this sub-section the Permits day fixed for the sale is exclusive. The writ was in to rcm.^ln the sheriff's hands on 30th December, and sale was "°satisfied. fixed for 3rd January. Held, that this proved in- solvencv within ss. (h) : Re Lake Winnipea. Sc, Co. (1891), '7 M. R. 255. Evidence of an actual seizure is necessary: In re Eivart Carriage Works (1904), 8 0. L. -R. 527, 529; Rapid City Farmer's Elevator Co., 9 Man. L. R. 574; Re Great West Rrick, &c., Co. (1915-6), 9 Sask. L. R. 240. See as further illustrations the cases cited in Clarke's Insolvent Acts (1877), i)p. 26 to 46, under the sections of the Insolvent Act then in force, as exhibiting the principles of decision hiid down by Canadian Courts in respect to analogous enactments. This sub-section is not affected by s. 4: Re Instal- lations, Ltd. (1913), 14 D. L. R. 679. 4. A company l.s deemed to be unable to pay its debts asconipjuiy tbey brrome due, wbenever a creditor, to wbom tbe company ) of s. 3 empowers the Court to super.sede a jM'ovincial or voluntary winding-up in the case of a solvent coTii|)aiiy incorporated under provincial charter, as such an apy)lication of the .section migiit iiii|)ort into it a power idlra vires of the Dominion Parliament. Tlu> point does not seem to have arisen. I n such event the Court would in any case exercise its discretion against grant- ing the order. (594 DOMINION WINDIXC-ITP ACT. Sect. 6. I'lin iiu'ial companies. Foreign fompanies. Pl{()VIX('IAL COMI'AMKS. A company, tli()iiii:li incorpoiatcd by a Provincial Logislatnro, may bo pnt into compulsory liiiuidation and wound uj) under this Act if the company is in- solvent. The Windiiiii'-u}) Act is in the nature of an insolvoncv law: SJwolhred v. Clark (1890), 17 S. C. R. 265; Be Union Fire Ins. Co. (1887), 14 0. R. 618; (1890), 16 A. R. 161; (1890), 17 S. C. R. 265; Re El- dorado Union Store Co. (1886), 18 N. S. (6 R. & G.) 514; Re British Cohnnhia Iron Works Co. (1898), 5 B. C. R. 536. If a pro vinci ally incorporated company is not shown to be insolvent the Act does not apply: Re Cramp Steel Co., Ltd. (1908), 16 0. L. R. 230. A company incorporated under the Companies Act of the Province of Ontario and carrying: on business in Ontario, is 'doing business in Canada,' within the meaning of this Act: Re Ontario Forge and Bolt Co. (1894) 25 0. R. 407. See Re British Columbia Iron Works Co., supra. Notwithstanding the Act, 52 Vict., c. 32 (Dom.), amending the then Dominion Winding-up Act, the On- tario Winding-up Act, R. S. 0. 1897, c. 222, does not apply to a company incorporated in Ontario where ap- plication is made to wind up on the ground of insol- vency, because local legislatures have no jurisdiction in matters of bankruijtcy or insolvency: Re Iron Clay Brick yiamifacturino'Co.; Turner's Case (1889), 19 0. R. 113. See Macklin v. Doivling (1890) 19 0. R. 441. Foreign Companies. The Dominion Parliament can,, in the exercise of its powers respecting insolvency and bankruptcy, leg- islate respecting insolvent companies doing business in Canada and with reference to the property of such companies within its jurisdiction: Allen v. Hanson (1890), 18 S. C. R. 667, 1 ; Re Breakwater Co. (1914), 33 0. L. R. 65. APPLICATIOX OF ACT. 695 The business of a foreign company having assets Sect. 6. in Canada may be wound up here although the com- pany is in process of being wound up elsewhere: Re Stetvart Gold Dredging Co. (1912), 7 D. L. R. 736; Re Breakivater Co. (1915), 33 0. L. R. 65. Canadian policy holders petitioned for distribu- tion of the deposit made by a company, a foreign corporation, with the Minister of Finance, under 31 Vict., c. 48 (Dom.) and 34 Vict., c. 9 (Dom.), the com- pany being insolvent. Held that they were entitled to the relief asked notwithstanding that proceedings to wind up the Company were pending before the English Courts: Re Briton Medical and General Life Association, Limited (2) (1886), 12 0. R. 441. Quaere, whether an order will be made in the case of a foreign company not registered and illegally carrving on business in contravention of local legis- lation : Re Nelson Ford Lumber Co. (1908), 8 W. L. R. 79. Similarly it has been held in a great number of English cases that foreign companies doing business in England can be wound up there: Re Mercantile Bank of Australia (1892), 2 Ch. 204; Re Matheson Bros. & Co. (1884), 27 Ch. D. 225; Re Commercial Bank of S. Australia (1886), 33 Ch. D. 174; (1887), 36 Ch. D. 522; Re Federal Bank of Australia (1893), 37 Sol. J. 341 ; Re Conim,ercial Bank of India (1868), L. R. 6 Eq. 517. But the English Court refused on grounds of ex- pediency to wind up a ])Mnking company formed in India and carrving on business at Calcutta : Re Union Bank of Calcutta (1850), 3 De G. & Sm. 253. The English Court has no jurisdiction to wind up a foreign company carrying on business merely through an agent in Enghnid : /.V Lh>gd Generate Italiano (1885), 29 Ch. D. 219. Where liquidation is sought in Canada with the concurrence of the foreign liquidator and as ancillary to the forei.gn winding up, the Supreme Court of Can- ada held that this Act wnrnnited the making of the (.)9G DOMINION WINDING-UP ACT. Sect. 6. order and that the statute is not ultra vires of the Foroigu Canadian Parliament: Allen v. Hanson (1890), 18 tx>mpanies. g. C. R. 667, commenting' on and partially overruling the following cases: — Be Steel Company of Canada (188-4), N. S. (5 R. G.) 49; Merchants' Bank of Hali- fax V. Gilles'pie (1885), 10 S. C. R. 312; Be Halifax Sugar Bcfinery Company (1889), 22 N. S. 71. All the Winding-up Act seeks to do in the case of foreign corporations is to protect and regulate the property in Canada and protect the rights of the creditors of such corporations upon their property in Canada. Although all the provisions of the Act are not applicable to foreign companies, those which are should be acted upon : Allen v, Hanson, supra. In Be Breaktvater Co. (1914), 33 0. L. R. 65, Mid- dleton, J., however, held that once the winding-up order is made the provisions of the Act apply and con- trol the whole situation; that the winding-up order under the Act is in no sense ancillary to the proceed- ings in the foreign Court, but is an independent and self-contained proceeding. It was also held that it was the duty of the Canadian liquidator to distribute the Canadian funds; and that he could not discharge himself by remitting them to the foreign liquidator. In Allen y. Hanson, supra, Strong, J., at p. 674 ap- pears to have taken a somew^hat different view of the nature of the proceedings and of the duties of the Canadian liquidator. See also Be Stewart S Matthews, Ltd. (1916), 26 Man. L. R. 277. The following have been ordered to be wound up : Companies Companies incorporated by a Royal charter: bewouLd" P>^'^^1^ of Australia (1895), 1 Cli. 578. Companies incorporated by Si)ocial Act: Borough of Portsmouth Tramways Co. (1892) 2 Ch. 362. A tram company incorporated by a special Act may be wound up, not being a railway company: Re Brentford and Isleiuorth Tramivays Co. (1884), 26 Ch. D. 527; Be Borough of Portsmouth Tramivays Co. (1892), 2 Ch. 362. up. APPLICATION OF ACT. 697 The Court will be iiKJst cautious about winding up Sect. 6. a company, in the nature of a public undertaking, which the legislature has declared to be of great public benefit: Be Fraternity of Free Fishermen (1887), 36 Ch. D. 329; Re Exmouth Docks (1873), 17 Eq. 188. See contra Re 'Barton-upon-Humher, dc, Co. (1889), 42 Ch. D. 585; Re Borough of Portsmouth Tramivays Co., supra. A social club is not an association or a trading company within the Winding-up Act: Be Montreal City Club (1895), 8 R. J. Q. (S.C.) 527; Be St. James' Club (1852), 2 D. M. & G. 383; Langevin v. The Stad- ium Co. (1917-8), 19 Que. P. R. 2^5; Durocher v. Club Champetre (1917-8), 19 Que. P. R. 175. A club which has only subsidiary powers to do certain acts of a commercial nature is not a commercial company: Langevin v. The Stadium Co. supra. Nor is a literary society: Be Bristol Athenaeum (1890), 43 Ch. D. 236. A company dissolved after a mnding-up cannot again be ordered to be wound up: Coxon v. Gorst (1891), 2 Ch. 73; unless the winding up can be im- peached for fraud: Be London £ Caledonia Co. (1879), n Ch. D. 140; Be Pinto Silver Mining Co. (1878), 8 Ch. D. 273. But see Be Crookhaven Mining Co. (1886), L. R. 3 Eq. 73. A company irregularly incorporated is non-exist- ent and cannot be wound up : Be National Debenture Corporation (1891), W. N. 83; Oakes v. Turquand (1867), L. R. 2 IT. L. 354. The same applies to an illegal compnny: Be Padstow Total Loss (1882), 20 Ch. T). 143; 7^/ re Ilfracombe, &c., Building Society (1901), 1 Ch. 102. It is immaterial whether the company was carrying on business at the date of the winding-up: Scotl v. JTydr (1909), Q. R. 18 K. B. 138. An incorporated bank whicli has never become entitled to commence business as a bank may be wound up: Be Monarch Bank (iniroported; May'29, 1908.) Tli<" Court lias Jur- isdiction to wind up ;i M.iiiltoba Comitiiny having its head oflicc in llir [.lovincc it' it has assets in C;in;Mla, Sect. 6. .duplication (if Act. 1)98 DOMINION WINDING-UP ACT. although it never carried on any business iu Manitoba : lie Stewart cO Mattheus Ltd. (191G), 26 Man. L. K. 1>77. Sub-section {b) of s. 6 is not limited in its applica- tion to companies being wound up at the date of 45 \'ict., c. 23. It applies also to companies insolvent though not technically being wound up and against which proceedings are being taken to realize their as- sets and pay their debts: Be Union Fire Ins. Co. (1886), 13 A. R. 268. There is no clashing between s. 6 of R. S. C. c. 129 and s. 3 of 52 Vict., c. 32, as the latter Act provides for the voluntary winding up of the companies falling wdthin its provisions and the former for a compulsory winding up: Be Ontario Forge S Bolt Co. (1894), 2*5 0. R. 407. A provincially incorporated company must be brought within subsections {a) or {h) if an order is to be made: In re Outlook Hotel Co. (1909), 2 Sask. L. R. 435, 439. Certain cor- 7. This Act does not apply to building societies which have porations. j-^q^ r^ capital stock or to railway or telegraph companies. E. S., excepted. ^ ^^^^ g. 3 ; 52 V., c. 32, s. 3. ' See Be Union Fire (1890), 17 S. C. R. at p. 274. PART T. GENERAL. Subject to Part II. Subject to Part III. Limitation of Part. 8. In the case of a bank other than a savings bank tlie provisions of this Part are subject to the provisions of Part IT. of this Act. R. S., c. 129, ss. 4 and 97. The provisions in ss. 149 ff. must be complied with before the winding up can proceed. See Mott v. Bank of Nova Scotia (1887), 14 S. C. R. 650; Be Central Bank (1888), 15 0. R. at p. 310. 9. In the case of life insurance companies, and of insurance companies doing life insurance and other insurance, in so far as relates to the life insurance business of such companies, the provisions of this Part are subject to the provisions of Part III. of this Act. E. S., c. 129, ss. 4 and 105. WINDING-UP ORDEE. 699 10. In the case of insurance companies other than life Sect. 10. insurance companies, and of insurance companies doing life"^~p — ~. — insurance and other insurance, in so far as relates to such other Part IV. insurance, the provisions of this Part are subject to the provi- sions of Part IV. of this Act. R. S., c. 129, ss. 4 and 115.. Winding-up Order. 11. The court may make a winding-up order, — In what (a) wliere the period, if any, fixed for the duration of the hig-up order company by the Act, charter or instrument of incorpora- "»^J' ^^ tion has expired ; or where the event, if any, has occurred, ™ upon the occurrence of which it is provided by the Act or charter or instrument of incorporation that the com- pany is to be dissolved; (6) where the company at a special meeting of shareholders called for the purpose has passed a resolution requiring the company to be wound up; (c) when the company is insolvent; (d) when the capital stock of the company is impaired to the extent of twenty-fi've per centum thereof, and when it is shown to the satisfaction of the court that the lost capital ' will not likely be restored within one year ; or, (e) when the court is of opinion that for any other reason it is just and equitable that the company should be wound up. 52 v., c. 32, s. 4. Resolution of shareholders to ivind-iip (h). It has been held in Ontario that sub-sections (b) Resolution and (d) do not apply to a provincially incorporated ers^toTvind company; insolvency must be shown: Re Cram;p"P^^^- Steel Co., Ltd. (1908), 16 0. L. R. 230. But in Re The Colonial Investment Co. of Winnipeg (No. 2), (1914), 15 D. L. R. 634, a Manitoba company being voluntarily wound up pui'suanl to a sjiai'elioldors' resolution was oi-dorod to be wound u]» under tliis sub-section; and Kelly, J., made an ordci- under sub- sections ((/) and (e) in the case of an Ontario com- pany: Re Hamilton Ideal Mannfacturinp Co. (1915), 34 0. L. R. 66. See also Re Union Fire Insurance Co. (1886-7), 13 A. R. 268 at p. 289. As to what notice of the sliareholders' meeting is sufficient, see In re North-west Cattle Co. (1907), Que. 5 P. R. 30. •()() DOMI.NIOX WlxNOlNG-UP ACT. Sect. 11. Insolvency (c), Insolvency As to what constitutos insolvency see s. 3 and ^^'' notes, also tlio notes to s. 6. Capital impair i'd (d). Capital im- In Hamilton Ideal Manufacturing Co., Ltd. (1915), pane . n^ q -j^ ^ ^^^ ^^^^ companj^ had sold most of its assets to another company which had since gone into liquidation and was indebted to the vendor company. The company's assets outside of the money due to it were of small value and its business was not being actively carried on and there was no apparent pros- pect of a resuscitation of its business. It was held that an order might go under sub-section (d) and sub-section (e). As this was a provincially incor- porated company the case appears to be in conflict \vith Re Cramp Steel Co., Ltd. (1908), 16 0. L. R. 230. Just and equitable (e). Just and Where the subject matter of the business for equitable (e). ^^.j^^^^j tlic compauy was incorporated has disappeared the Court may order a winding-up : In re Haven Gold Mining Co. (1882), 20 Ch." D. 151; Hamilton Ideal Manufacturing Co., Ltd. (1915), 34 0. L. R. 66; Re Dominion Trust Co. & Boyce S McPherson (1918), 43 D. L. R. 538. In such cases it is said that the sub-stratum of the company is gone, e.g., where a company is formed to work a particular patent which is not granted: In re German Date Coffee Co. (1881-2), 20 Ch. D. 169. In the last mentioned case the general objects clauses were read as ancillary to the main object clause. As to the effect of a declar- ation inserted in the memorandum of association that none of the sub-clauses or objects therein specified shall be deemed subsidiary or auxiliary to the objects mentioned in the first sub-clause, see Cotman v. Brougham (1918), 87 L. J. Ch. 379 (H.L.). In In re Coolgardie Consolidated Gold Mines, Ltd. (1911), Sub-stra- tum gone. WIXDIXG-UP ORDER. 701 13 T. L. K. 301, Lindley, L. J., said that the Court Sect. 11. ought to look at the question whether the primary object had failed so that the sub-stratum was gone, not merely as lawyers, but as business men, and in so doing came to the conclusion that the framers of the memorandum of association had the working of a particular property in view. If a material part of the sub-stratum is gone then the Court will look at all the other circumstances in order to see whether it is just and equitable to mnd the company up. That the company was fraudulent from its inception and that a winding-up order was the best means of enabling defrauded shareholders to recover their money was held material: hi re Thomas Edicard Brinsmead £ Sons (1897), 1 Ch. -45; but an order has been refused where a mining com- pany still retained its property and there was still a means of working it under the charter: Harris- Maxwell Larder Lake dc, Co. (1909-10), 1 0. AV. N. 984. See also In re Suburban Hotel Co. (1867), L. R. 2 Ch. App. 737', Re Red Rock Mining Co. (1889-90), 61 T.. T. 785; Anr/lo-Mexican Land (1875), W. N. 168; Jn re Croivn Bank (1890), 44 Ch. T). 634; In re Florida (1901-3), 9 B. C. R. 108. Where the affairs of a company are brought to a Doa.ii.uk. deadlock it may be wound up on this ground: In re Sailing Ship 'Kentmere' (1897), W. N. 58; In re Anirrican Pioneer Leather Co. (1918), 87 L. J. Ch. 493; lU' Town Topics Co. (1911), 20 Man. R. 574, 578; aiul even something short of a c(miplete dead- h)ck may suffice. See Yenidje Tobacco Co. (1917), 86 L. J. Ch. 1; (1916) 2 Ch. 426; see also Re Winding- np Ordinance and Timbers, Ltd. (1917), 35 D. I.. R. 431. Mere dissension within the company is not sufficient ; in sucli cases the remedy of the sliare- lioldcrs is by action: II arris-Maxwell Larder Lake i&c, Co. (1909-10), 1 0. W. N. 984. In Br Dcweg d- O'llrir Cn. (1909). 13 O. W. R. 32, 38, the Court refused {(• make an order thougli ai)]inronfly there was a deadlock. 70'2 DOMiNlOA' WINDING-UP ACT. Sect. 11. Tlu' rule that the words 'jnst and equitable' are Hjttsdcni to be construed ejusdem generis with other sub- ni'i'e"* sections of the corresponding section of the Imperial (\)nipanies Act has been considerably relaxed in the later English decisions: In re Amalqatnated Syndicate (.1897), 12 Oh. 600; Yenidje Tobacco Co. (1917), 86 L. J. Ch. 1 at p. 7. Moreover sub-section (c) of the Do(min5on Act contains the words 'for any other reason' wliich do not appear in the corresponding Imperial section. Application for Order. By whom 12. The application for such winding-up order may, in the made. cases mentioned in paragraphs {a) and (b) of the last preced- ing section be made by the company or by a shareholder; and in the case mentioned in paragraph (c) of the last preceding section by the company or by a creditor for the sum of at least two hundred dollars, or except in the case of banks and insur- ance corporations, by a shareholder holding shares in the capi- tal stock of the company to tlie amount of at least five hundred dollars, and, in the other cases mentioned in the said section, l)y a shareholder holding shares in the capital stock of the com- pany to the amount of at least five hundred dollars. E. S., c. 129, s. 8 ; 52 V., c. 32, s. 5 ; 62-63 V., c. 43, s. 4. How and 13. Such application may be made by petition to the court wliere made, jn the province where the head office of the company is situated, or, if there is no head office in Canada, then in the province where its chief place, or one of its chief places of l)usiness is situated. Notice of 2. Except in cases where such application is made by the application, company, four days' notice of the application shall be given to the company before the making of the same. R. S., c. 129, s. 8 ; 52 v., c. 32, s. 6. Compare Imperial Companies Act, 1862, s. 82. The words 'capital stock' mean capital stock de jure or de facto, s. 2 (j). In the case of banks it is necessary to take the preliminary proceedings provided by ss. 149 ff. Practice. F^ractice When a creditor has decided to apply for an order that a company be wound up, he gives four days' APPLICATION FOR ORDER, 703 notice to the company of his application and at the Sees. 12-13. expiration of that time presents his petition verified by affidavit for such order to the Court. Notice of the time and place of the presentation of the petition should be served on the company along with the petition and affidavits. If an order mnding up the company is made the order appoints an interim liquidator, and after notice to creditors, a perman- ent liquidator is appointed to wind up the company: In re Steel Company of Canada (1884), 17 N. S. R. 49. A petitioner may discontinue proceedings before the winding-up order is made, but other creditors who are not themselves petitioners are not entitled to be substituted: Doyle v. Atlas Canning Co. (1895- 7), 5 B. C. R. 279. Where an order had been olitained in Chambers by one creditor, the conduct of proceedings was under the special circumstances given to other creditors who had also applied for such order: Be Joseph Hall Mfg. Co. (1884), 10 P. R. 485. Creditors may shew cause against or may appear and assist the petitioning creditor: Re Lake Winni- peg, dc., Co. (1891), 7 M. R. 255. In Ontario a petition may be presented to a Judge in Chambers: Re Toronto Brass Co. (1898), 18 P. R. 248. See s. 109. The Petition. The petition itself must allege facts sufficient to istition. justify a winding-uf) order. It is not enough that a proi)er case can be shown on tlie evidence: In re Wear Engine Works Co. (1875), L. R. 10 Cli. Ai^p. 188, 191; Re Kootenay Bretving Co. (1896-99), 6 B. C. R. 112; In re Outlook Hotel Co. (1909), 2 Sask. L. R. 435, 439. It is pi-udeiit to draw the ))etition so as to bring tile company witliin as many of the sub-sections of s. 3 as ])ossibl('. The petition should state the circumstances with sufficient detail to enable the Court to see from the < 04 DOMINION WINDING-UP ACT. Sees. 12-13. petition itsoli' tlmt a winding-up order ought to be ,p,j^ ^.^ made: Be Eldorado Union Stove Co. (188G), 18 N. S. tion. ' 514 ; Wear Engine Works Co. (1875), L. R. 10 Ch. App. 188 at p. 191; Langham Skating Rink Go. (1877), 5 Cli. D. 669; WJiite Star Consolidated Gold Mining Go. (1883)," 48 L. T. 815; Patent Cocoa Eihre Go. (1876), 1 Cli. D. 617; Rica Gold Co. (1879), 11 Ch. D. 36; In re Atlas Canning Co. (1895-97), 5 B. C. R. 661, 667. If a creditor petitions for a compulsory order after the commencement of voluntary winding-up proceed- ings, he should allege the voluntary winding-up, and that he will be prejudiced thereby: Re Electrical Engineering Go. (1891), 64 L. T. 658; Re Russell Gordner & Go. (1891), 3 Ch. 175; Re Medical Battery Co. (1894), 1 Ch. 444. One petition to wind up two companies is wrong: Shields Marine Insurance Co. (1867), W. N. 265 and 296. Amendment. A petition may be amended by leave of the Court : Re Queen's Benefit Building Society (1871), L. R. 6 Ch. 815.. Amendment. The Court has power to permit amendments under ss. 128 and 129 of the Act: Re Canadian General Service Corporation (No. 2), (1914), 16 D. L. R. 17; 24 Man. L. R. 143. So where enough was shown to make it appear advisable that the company should be wound up, in Re Redpath Motor Vehicles Co. (1904), 4 0. W. R. 515, the Court gave leave to amend, offer additional evidence and again present the petition; see also Re Ewart Carriage Works, Ltd. (1904), 8 0. L. R. 527; Re Abbott Mitchell, c&c, Co., Ltd. (1901), 2 0. L. R. 143. Where the petition can only be amended by alleging facts of insolvency arising since the date of filing the petition leave to amend will be refused; for, by section 5, the winding-up commences from the service of notice of presentation of the peti- tion and the rights of other persons may be affected by such amondmont: Re Kootenay Breiving Co. (1896- 99), 6B. C. R. 112. APPLICATIOX FOR ORDER. 705 Notice of application. Sees. 12-13. The four days' notice need not be clear days: Ee Notice of Arnold Chemical Co. (1901), 2 0. L. K. 671. Under ^^pp^^*=^*^""- the rules in force in Manitoba apparently four clear days' notice is necessary except in cases of special hardship ; and a Sunday will not ' be included : Ash- doivn Hardivare Co. v. Residential Building Co. (1914- 5), 7 W. W. R. 690. Thus a notice given on the first day of the month for a hearing on the fifth is sufficient : Be Maritime Wrapper Co. (1899-02), 35 N. B. R. 682. The provision for four days ' notice of the application Waiver, cannot be waived by the company, and in the absence of requisite notice the order (Cannot be made, and although there is power to grant an adjournment under s. 14 this will not be done if there are other applications pending: Be Farmers' Banh (1910), 22 0. L. E. 556. In Great West v. Installations Ltd. (1914), 15 D. L. R. 896 (Alta.) it was held that notice was waivable; followed in the same province in Be The Winding-up Act; Be The Consumers' Coal Co., Ltd. (1917), 2 W. W. R. 143, where it was held that service of notice could be dispensed with under proper circumstances, e.g., where instructions to counsel to appear had been authorized at a meeting of t]ie board and counsel had in fact appeared. Apparently notice is dispensed witli where the com- pany is a partv to the application: Cie. Ponthriand v. Cosh/ (1912-13), 14 Que. P. R. 19. Tlio notice referred to in the section has reference to tiic hearing juid not to the filing, within the meaning of s. 5: Be Halifax Power Co. (1917), 36 D. L. R. 393. The notice must be served on the company. Ser- vice on an assignee for creditors is not a compliance with s. 13 (2): In re Bodney Casket Co. (1906), 12 O. Tj. R. 400. Service on tlie ci-editors, contributories or shareholders is not required, but notice of applica- tion to appoint a liquidator should be: Be Qu'Appelle Valley Farminq Co. (1888), 5 Man. R. 160. n.c.A. — A^ 706 UOMIMD.N WiMUlNG-Ur ACT. Sees. 12-13. These may, however, appear ex gratia : Re McLean, Appik-a.iou ^"^rmson ce Brodie, Ltd. (1910), 2 0. W. N. 294. Tlie for or.ior. eurator of an insolvent bank is entitled to notice of the presentation of the petition: lie Farmers' Bank (1910), 22 0. L. R. 556. The requirements as to service are governed by the general rnles of practice in force in the relative province, unless special rules have been made under s. 134, which will then apply. But the Consolidated Eules of Practice in Ontario are not made applicable by the Winding-up Act so as to enable the Court to shorten the period o'f notice of the application: Re Farmers' Bank, supra. Evidence in support of petition. Evidence in The petitioner must prove his case : Re Grundy peSn."^ stove Co., (1904) 7 0. L. R. 252; and the allegations in the petition sliould be verified by affidavit, for there must be evidence for the Court to act upon. While the Act does not require an affidavit the rules in force in the various provinces generally do, because a petition is not evidence: In re Atlas Canning Co. (1895-7), 5 B. C. R. 661. In In re Maritime Wrapper Co. (1899-02), 35 N. B. R. 682, it was held that the allegations in the petition could be proved at the hearing and need not be verified by affidavit. A petitioner is not entitled to discovery : Re West Devon Great Consols Mine (1884), 27 Ch. D. 109, but under the practice in Ontario the evidence of any witness may be obtained for use in support of the petition: Con. Rule 228. ^ Unless or until rules of procedure are made under s. 134 of the Act the rules of practice in force in the relative province are made applicable by s. 135: Re Belding Lumber Co., Ltd. (1911), 23 0. L. R. 255. So where the practice of the Court is to support petitions ])y affidavits and viva voce evidence, shareholders petitioning for a winding-up were held entitled to examine the company's directors as witnesses in support of the petition: Re Baynes Carriage Co. (1913), 7 D. L. R. 257; 27 0. L. R. 144. APPLICATION FOR ORDER. 707 Wliere the rules require an affidavit to be filed Sees. 12-13. before the presentation of the petition this require- "~ ment must be observed: Re Kootenay Breiving Co. (1896-99), 6 B. C. E. 112; leave to file a supplemen- tary affidavit will generally be refused: ibid. When as between two competing petitions the order is made on the one later in point of time, owing to failure to file the affidavit in support of the earlier petition before service of the latter, as required by the rules, this is not a proper case for appellate interfer- ence: Re Belding Lumber Co. (1911), 23 0. L. E. 255. The affidavit should be made by the petitioner, but an affidavit made by the petitioner's agent or solicitor may be sufficient: Re Qu'Appelle Valley (1888), 5 Man. E. 160, 166; and see Re African Farms Ltd. (1906), 1 Ch. 640. It has been held that in Manitoba a petition for a winding-up order can not be sujjported by statements verified by affidavit on in- formation and belief: Re Manitoba Commission Co. (1912), 2 D. L. E. 1, though the English practice and tliat in Ontario and British Columbia is otherwise: Re The Colonial Investment Co. of Winnipeg (1914), 14 D. L. E. 563, 572. An affidavit of a person who deposes on information and belief, and who on cross-examina- tion ai)))ears to have no knowledge of the facts, is a nullity: In re Atlas Canning Co. (1895-7), 5 B. C. E. 661 ; see also Outlook Hotel "(1909), 2 Sask. I.. K*. 435. Where the rules, as in Manitoba, do not perinil an affi- davit on information and l)elief, a geiicial vci-ilication by affidavit of various paragraphs of the petition is nol to be encouraged, Init constitutes evidence wliicli may be given eifcct to in tiie al)sence of any condicting matei-ial : /'r I'lic Colo}iiaJ fiircsf incut Co. of W'iinii- peg (1914), 14 J), r.. E. 563, 574. It is the ])ractice iii Ontario to sei'vc tlif allidavits with the petition, but quaere whethci' this is neces- sary unless the rules locally applicable specifically reciuire it. Foi" the practice in Saskatchewan sec Re Outlook Hotel Co. (1909), 2 Sask. L. E. 435, 437. Under the ])ractice of the Courts in the Province of r)ntario the officers (»f the company may be 708 DOMINION WINDING-UP ACT. Sees. 12-13. cxniniiu'd and their depositions may bo filed in sup- HviiU-nce in l'<»it ol' till' ai)plic*ation for the \viiidini>' up of the p.'ri'tion. ''' conii)any. Somotimos the company itself or its officers admit the insolvency. In such case the preferable practice is for the company to ai)point counsel to appear on their behalf on the hearing and admit the insolvenc\' rather than to obtain an affidavit from one of the officers of the company whose statement having regard to the decisions below cpioted may prove insufficient. It will usually be desirable to supplement the affidavit by such additional evidence as is obtainable, and if any question is likely to arise regarding the existence or validity of the petitioner's claim, then to set forth fully the facts proving his claim. Where the evidence dejjends upon statements which have been exhibited by the company, or ad- missions made by them, or written admissions or correspondence, these should be set forth as exhibits to the affidavit filed. The deponent on an affidavit filed in support of the petition may be cross-examined thereon : Re Manitoba Commission Co., (1912), 2 D. L. R. 1 at p.4; so also the affiant of an affidavit in opposition under the Manitoba Winding-up Act and rules : Re Manitoba Commission Co. (1911-2) 19 W. L. R. 893. But peti- tioners are not entitled to a preliminary order that cer- tain of the company's officers should produce the books of the company and auditors' reports on their examin- ation as compulsory witnesses in support of the peti- tion : Re Baynes Carriage Co. (Decision No. 2), (1912), 8 P. L. R. 309. The non-payment of a disputed debt is no proof of insolvency: Re Wheal Lovell Mining Co. (1849), 1 Mac. & G. 1, and Gold Hill Mines (1882), 23 Ch. D. 21 1 ; whether there is a debt must be settled by action before petition: Re Great Britain Mutual Life Assur- ance Society (1880), 16 Ch. D. 246; but the Court will determine existence of debt, if possible, on hearing petition: Re Imperial Silver Quarries (1868), 16 W. R. 1220; Re Anglo-Bavarian Steel Ball Co. (1899), W. N. 80. APPLICATION FOR ORDER. 709 If the dispute is bona fide the Court will restrain Sees. 12-13. petition: CercJe Restaurant Castiglione Co. v. Lavery " (1881), 18 Ch. D. 555; Niger Merchants Co. v. Capper (1877), 18 Ch. D. 557. Misconduct of directors is no ground for petition unless producing insolvency: Re Anglo-Greek Steam Co. (1866),L. R. 2Eq. 11. Non-payment of a judgment is no acknowledgment of insolvency: Re Qu'Appelle Valley Farming Co. (1888), 5 M.R. 160. Non-appearance of a company to oppose a petition is no sufficient acknowledgment of insolvency within s-s. (d) of s. 3: i^e Lake Winnipeg T. L. £ T. Co. (1891), 7 M. R. 255. The petitioner, who was president of the company, and also a large creditor, made affidavit that he knew the company to be unable to pay in full, but gave no comparative statement. Held, not sufficient evidence of insolvency: Re Lake Winnipeg T. L. S T. Co., supra. The affidavits in support of the petition must bring it strictly w^ithin the words of the section. An affidavit of "insolvency within the meaning of the section" without stating facts is insufficient: Re Rapid City Farmers Elevator Company (1894), 9 Man. L. R. 574, following Re Qu'Appelle Valley Farming Co. (1888), 5 Man. L. R. 160. See Re Lake Winnipeg Transporta- tion Liimher £ Trading Co. (1890), L. J. 358; 7 Man. L. R. 255; Chapel House Colliery Co., 24 Ch. D. 259, 270. Where a petitioning creditor's debt is established rracticc. and llicre is evidence tliat the company is unable to pay its debts within tlic incaiiiiiu- oT llic statute a winding-U]) (»rdiT is, speaking gcnei-ally, as against tl)(' c()mi)any ex debito justitiae, and not a matter of discretion: Boires v. Hope M. Life Insurance Co. (1865), 11 TI. Ti. C. 402; lie Western of Canada Oil Co. (1873), L. i;. 17 Eq. 1 ; Re Chapel House Colliery Co. (1883), 24 Cli. 1). 259; Re Uruguay Central Ry. Co. of Monte Video (1879), 11 Ch. D. 372; Re Great Western {Forest of Dean) Coal Consumers' Co. (1882), 21 710 DOMINION WINDING-Ur ACT. Sees. 12-13. CMi. D. 77::; lu W'rst Hartlepool Iron ]Vorks Co. :vp^,,i,.„tion (1875), L. R. 10 Oil. G18; Re Isle of Wight Ferry Co. f..i- ordor. (ISfif)), 2 H. & M. 597; but this rule does not apply ;is 1)et\v('('ii iho j)etitionini>' creditor and otlier credi- tors, and if the majority oppose the Court ought to reg-ard their wishes: Re West Hartlepool Iron Works Co. (1875), L. R. 10 Ch. 618; Westej-n of Canada, etc., Co. (1873), 17 Eq, 1; Cha2^el House Colliery Co. (1883), 24 Ch. D. 259; Re E. BisJiop S Sons, Limited 11900] 2 Ch. 25-1; but the opposing creditors must prove their case: Re Krasnapolsky Co. [1892] 3 Ch. 174. AVhere the Court was satisfied on the evidence that the company was unable to pay its debts, a winding- up order was made, though a call had been made, wliich the company alleged would meet its embarrass- ments: Ex parte Spartali d Tabor; Re International Contract Co. (1866), 14 L. T. 726. Where a Banking Company had stopped payment, and the petitioning creditor proved his debt and re- fusal to pay, the Court refused to assent to a sug- gestion that the company would resume business in a few days, and made the order as ex dehito justitiae : Re Consolidated Bank (1886), 14 L. T. 656. " A shareholder's petition on the ground of impair- ment of capital must be accompanied by evidence therefor apart from his affidavit: Re A Company a917), 34 D. L. R. 396, 27 Man. L. R. 540. Petition Granted. Petition In the following cases the order was made on the ^-ranted. petition of a creditor, though opposed by the com- nanv: Re Commercial Bank of South Australia (1886), 33 Ch. D. 174; Geyieral Rolling Stock Co. (1865), 34 Beav. 314; Isle of Wight Ferry Co. (1865) 2 H. & .M. 597; Family Endoivment Society (1870), L. R. 5 Ch. 118; National Provincial Life Ass. Co. (1870), L. R. 9 Eq. 306; General Co. for Promotion of Land Credit (1870), L. R. 5 Ch. 363; Princess of Reuss v. Bos (1871), L. R. 5 H. L. 176; King's Cross Indus- APPLICATIOX FOR ORDER. 711 trial DiL'dUngs Co. (1870), L. R. 11 Eq. 149; Re Home Sees. 12-13. Assurance Association (1871), L. R. 12 Eq. 112; Flag- staff Silver Mining Co. (1875), L. R. 20 Eq. 268; Globe New Patent Iron Co. (1875, L. R. 20 Eq. 337. A company's sphere of action being out of Canada is no bar to its being wound up provided it is incor- porated there and is insolvent : Re Madrid & Valencia Ry. Co. (1849), 3 Dom. & Sm. 127; Re F adage Paris- ien (1865), 34 L. J. Ch. 140. Nor the fact that all its members are foreigners : Re General Company for Promotion of Land Credit (1870), 5 Ch. 363. Petition Dismissed. In the following cases a petition bv a creditor was Petition dismissGd dismissed. Association illegal: Padstoiv Total Loss Assn. (1882), 20 Ch. D. 137; Petitioner a debenture holder: Heme Bay Waterivorks Co. (1878), 10 Ch. D. 42; Re Uruguay Central Ry. Co. (1879), 11 Ch. D. 372. Petition opposed by the majority of creditors and it did not appear that the petitioner would gain any- tliing bv an order: Re Free Fishermen of Faversliam (1887), "36 Ch. I). 329; Re Chapel House Colliery Co. (1883), 24 Ch. D. 259; Re Uruguay Central Ry. Co. (1879), n Cli. D. 372. Petitioners' claim for unliquidated damages and disputed : Pe«-?/-Ffw Colliery Co. (1877), 6 Ch. D. 477. Petitioners' debt assigned since petition was pre- sented: Rp Paris Slating Rink Co. (1877), 5 Ch. D. 959. Where twentv-one days* after demand had not ex- pired wlien petition presented: Re Catholic Publish- ing Co. (1864), 2 T). J. & S. 116. Petitioners' debt disputed iweiity-one days after demand had ela])sed befoi-e petition was presented: London ((• Paris Ranking Corporation (1874), 19 Eq. 444; London Wharfing d Warehousing Co. (1865), 35 Beav. 37; Re Imperial Ilifdropalhir Hotel Co. (1883), 49 L. T. 147. 712 DOMINION WINDING-UP ACT. Sees. 12-13. Petitiou dismissed. Petitioners' del)t small and disputed and no evi- dence of the company's insolvency was adduced: Re Gold Hill Mines (1882), 23 Cli. D. 210; Niger Mer- chants Co. V. Capper (1877), 18 Ch. D. 557; Re Positive Government Ins. Co., (1877), W. N. 23; Re Britisli Alliance Assurance Corporation (1877), W. X. 2G1; Ex p. Neiichatel Asphalt Co. (1883), W. N. 17. Petitioner's debt small and attached by judgment creditor of his own: Re European Banking Co. (1866), L. R. 2 Eq. 521. Petitioners' debt not disputed but majority of creditors preferring a voluntary winding-up : Langley Mill Steel, etc., Co. (1871) L. R. 12 Eq. 26; Re The Oro Fino Mines (1900), 7 B. C. R. 388. Where the company had made a voluntary assign- ment for the benefit of creditors and it was the desire of the great majority in number and value of the creditors that liquidation should proceed under the assignment : Wake field Rattan Co. v. Haniilton Manu- facturing Co. (1893), 24 0. R. 107: See Re E. Bishop d- Sons, Limited (1900), 2 Ch. 254. See further notes to s. 14. Petition adjourned. Petition Adjourned, In the following cases a petition by a creditor was ordered to stand over to see if means could be found for paving dissentient creditors : Re Western of Canada Oil Co. (1873), L. R. 17 Eq. 1; Re St. Thomas' Dock Co. (1876), 2 Ch. D. 116; Re Exmouth Docks Co. (1873), L. R. 17 Eq. 181; Re Brighton Hotel Co. (1868), L. R. 6 Eq. 339; i?e Heme Bay Waterworks Co. (1878), 10 Ch. D. 42. But see per Stirling, J., Re Borough of Portsmouth Tramways Co. [1892], 2 Ch. 362. In these cases the order as between the petitioning creditor and the company is ex debito justitiae, and the enlargement of the hearing is granted on the representations and T\ishes of creditors other than the petitioner, not on the application of the company or of contributories. Compare Re International APPLICATIOX FOR ORDEE. 713 Contract Co. (1866), ll L. T. 726; Re Consolidated Sees. 12-lZ. Bank (1866), 14 L. T. 656. Petitioner was a debenture holder, and the petition was ordered to stand over for inquiry whether the company had any assets other than those comprised in the debentures: Re Olathe Silver Mining Co. (1884), 27 Ch. D. 278. Petition opposed by a majority of creditors, and it was ordered to stand over for six months on terms, this being considered more beneficial to the other creditors than dismissing it: Re Great Western Coal Consumers Co. (1882), 21 Ch. D. 769. Petitioners' debt disputed: Ex p. The Rhydydefed Colliery Co. (1858), 3 De G. «& J. 80; Re Inventors Association (1865), 2 Dr. & Sm. 553; Re Imperial Guardian Life (1870), L. R. 9 Eq. 447; Bowes v. Hope Life Ins. Co. (1865), 11 H. L. C. 389; Re General Exchange Bank (1866), 14 W. R. 827; Re Universal Bank (1866), 14 W. R. 906. And see The Brighton Club (1865), 35 Beav. 204; 11 Jur. N. S. 436. See also Re Edmonton B reiving <& Malting Co. (Alta.) (1918), 2 W. AV. R. 350. Who May Petition. It is to be noted that a person may be a 'creditor' who may within the meaning of s. 12 and s. 2 (j), and therefore^"'''*'''"- entitled to petition when a company has become insol- vent, even though he is not a creditor to whom a debt is 'then due' so as to be entitled to proceed under s. 4. '*A creditor, in its primary meaning, imports one to whom a debt is due, in a secondary meaning one to whom money is owing but the period of payment has not arrived, debitum in praesenti solvendum in futur(>. Section 6 (now s. 4) of the Act refers to a creditor whose debt is 'then due'; in section 8 (now s. 12) the term is 'creditor' only. The distinction is not un- meaning. In the one case the de])t must be due, in the other it need not be due. In the hitler case when a company has become insolvent such a creditor car lie a petitioner": Tn re Atlas Canning Co. (1895-7), 5 B. C. R. 661 at p. 668. i 14 DOMINION WINDING-UP ACT. Sees. 12-13. A secured creditor may petition even thou^i he rrr has a lien for the full amount of his claim: Re Strathy \\ iu> ni;i\ •-' i-titio„. ^y■u•e Fence Co. (1904) 8 0. L. R. 186, 192; and cf. In re Great Western Coal Consumers Co. (1882), 21 Ch. D. 769 ; but he need not state the value of his security : ISJoor V. Anglo-Italian Bank (1878-9), 10 Oh. D. 681; Be Cushlng Sulphite Fibre Co. (1904-06), 37 N. B. R. 254. Whether a l)ondholder is eiititled to petition de- pends on the terms of his security. If a direct debt from the company to the holder is created in the bonds and there is no covenant with the trustees of the covering trust deed the bondholder may petition: In re Olathe Silver Mining Co. (1884), 27 Ch. D. 278; Init not if the covenant is with the trustees only; In re Uruguay Central (1879), 11 Ch. D. 372.' In Re Cushing Sulphite Fibre Co. (1904-5), 37 N. B. R. 254, two judges thought that the bonds in question fell under the Uruguay Central case, but the majority of the Court held that the bondholder was entitled to petition. Holders of debenture stock secured by trust deed in which the covenant to pay principal and interest is between the company and the trustee, although the covenant is to pay the debenture stockholders, are not creditors entitled to present a winding-up petition. They are cestuis que trust only: Dunderland Iron Ore Co. (1909), 1 Ch. 446. The following have been held entitled to petition: An executor of a creditor : Be Masonic and General Life Assurance Co. (1885), 32 Ch. D. 373; an assignee legal or equitable or bona fide holder of a debt; Re The Ooregum Mining Co. (1885), 29 Sol. J. 204; Mont- gomery Ship Collision Doors Syndicate (1903), 72 L. J. Ch. 624 (but the real and beneficial owners of the debt should join in the petition and proof: Re People's Loan (1906), 7 0. W. R. 253); a company: Ex p. Mexican Santa Barbara Mining Co. (1890), 34 Sol. J. 269; an assignee to whom the company has made an assignment for the benefit of its creditors : National Automobile (1914), 7 0. W. N. 22, in which it was APPLICATION FOK OEDER. 715 directed that the order should go on the filing of a Sees. 12-13. written consent bv a creditor or shareholder to the amount required by s. 12. A shareholder may petition, even though there is a voluntary winding-up pending : National, dc, Ltd. (1902), 2 Ch. D. 34, and notwith- standing that his shares carry no voting rights: Canada Provident and Investment Cor. (1913), 14 D. L. R. 782 ; but if his shares are fully paid he has no locus standi to petition unless he alleges that there is a surplus and supports his allegation by evidence, for otherwise he has no interest in the winding-up: I)i re Vron Colliery Co. (1881-2), 20 Ch. D. 442, 447. That the petitioner is an execution creditor is no bar where there are several execution creditors : Lake Winnipef], Sc., Co. (1891), 7 Man. R. 255. The debt must be unquestioned and liquidated: Schneider v. Laurentide (1914), 15 Que. P. R. 271. An equitable debt will support a petition: Re London and Birmingham Flint Glass Co. (1859), 1 D. F. & J. 257. A garnishee order against a company does not make the garnishor a creditor of the company: Re Combined Weighing Machine Co. (1889), 43 Ch. D. 99. An hypothecary creditor, who is not personally a creditor of a company, but can only take hypothecary action against it by reason of being in possession of immovables, has no status to demand that it be put in liquidation: Lediic v. Kensington Land Co. (1900), 16 R. J. Q. 213 (S. C). Persons wlio are parties to a deed of assignment made by tlic c()mi);my for the benefit of its creditors and wliereby an extension of time for ])ayment of the company's debts is agreed to, are estopped fi-om presenting a winding-up petition until the period of extension lias exjiired: In re Atlas Canvinr/ Co. (1895-97), 5 B. C. R. GG1. Pelitioning without reasonabh' and ]ii-()bal)lt' cause is a ground for action by company: Quartz Hill Con- solidated Gold Mining Co. v. Lyre (1883), 11 Q. B. D. 674; Svppresio veri will defeat ])e1ition; Ex. p. Barnett; Re Ipswich Ry. Co. (1849), 1 DeG. & Sm. 744. Ui DOMINION WINDING-UP ACT. Sees. 12-13. Sli a ro- ll older. Power of court on application. No assets. A sliarelioklor may petition in the cases mentioned ill i)a]*agTai)lis (a) and (b) of s. 11, but not on the ground of insolvency under i)aragraph (c) : Re A Compcuiif (1917), 34 D. L. li. 39(), 27 Man. li. 540. See also lie Colonial Investment Co. (No. 2) (1914), 15 D. L. li. 634. In the cases mentioned in paragraphs (d) and (e) the petitioning shareholder must hold shares to at least five hundred dollars. 14. The Court may, on application for a winding-up order, make the order applied for, dismiss the petition witli or without costs, adjourn the hearing conditionally or unconditionally, or make anv interim or other order that it deems just. E. S., c. 129, s. g." Compare Imperial Companies Act, 1862, s. 86. It has been said that on insolvency being shown a creditor is entitled to an order ex debito justitiae, but the words of the section imply a discretion in the Court: In re Strathy Wire Fence Co. (1904), 8 0. L. R. 186, 192, where Garrow, J.A., said: 'Some dis- cretion must, in my opinion, be exercised in every case. The Court must before granting the order, see that the petitioner has a lawful claim, that the com- pany is insolvent, that there are assets to be administered and that the proceedings proposed are necessary.' The most that can be said is that when a creditor has made out a case under the Act he is generally or prima facie entitled to an order: In re Chapel House Collierij Co. (1883), 24 Ch. D. 259 at p. 268. No assets. An order will not be made where it is shown that there are no assets which the liquidator can receive : In re Chapel House Colliery, supra; Okell v. Morris, Sc, Co. (1902), 9 B. C. R. 153; In re Georgian Bay Ship Canal Co. (1899), 29 0. R. 358; Re Ocean Falls Co. (1913), 13 D. L. R. 265. But see contra, Re Alex- ander Dunbar Sons & Co. (1910), 9 E. L. R. 217. It is different if there are some assets : In re Manitoba Commission Co. Ltd. (1913), 9 D. L. R. 436; Re Lacey POWER OF COURT ON APPLICATION. 717 d Co. (1877), 46 L. J. Cli. 660; or it" it is not clear that Sect. 14. there will be none, e.g., where there are shares sub- scribed for but not fully paid up : In re Georgian Bay Ship Canal Co. (1899), 29 0. R. 358; or where there is a probability that the creditors will derive some benefit from the order: Be South East Corporation (1915), 23 D. L. R. 724. The onus is on those oppos- ing the petition to show that the creditors will derive no benefit, ibid. " Under special circumstances, e.g., where a receiver ■ - for debenture holders has carried on the business of the company and has incurred further liabilities, an order may be made, even though the assets are small and more than covered by the debentures and the petitioners can not show that there will be any surplus for them : Be Chic (1905), 2 Ch. 345. Where debenture holders were carrying on the business of the company, although no receiver had been appointed, an order was made in favor of petitioning judgment creditors on the ground that it was just and equitable to wind up the company even assuming that the assets were insufficient for the de- benture holders: In re Alfred Melson Ltd. (1906), 1 Ch. 841. Under the later English decisions the order will not be refused because the assets are insufficient or because there are no assets; and if tiie order will be useful, though not necessafily fruitful, there is jurisdiction to make it: Be Crigglestone Coal Co. (1906), 2 Ch. 327. Proceedings unnecessarij. If it does not appear that the proceedings pro- Proreciings posed are necessarv an oi'der will not be made: /,*(j '"hhh-'-^-^'i'v Stratlni Wire Frnrr Co. (1904), 8 O. I.. R. 186; nor if the petitioner would gain nothing l)y the order: /iV • East Krul Colliery Co. (1914), 30 T. L. R. 659, bnl s<-e In rr Thr Cusliuui SHlpJrilr Fihrr Co. (1905), :\7 N. B. R. 254. 718 DOMINION W lNL)lN(i-Ur ACT, Sect. 14. Res judicata. Res i'lic objot'tiou that a sccoiid application t'or a •""■'*" "■ \vimlini>-n|) order can not be inatle al'tei* the lirst ap- plication has failed, on the gTound tliat the matter is res adjudicata, does not apply where on the second applicaticm it appears that the parties are not the same and that the material urged in favor of the second application is different, although the purpose of the application is similar to that of the former : Re Manitoba Commission Co. Ltd. (1913), 9 D. L. R. 436. Contests between creditors. Contests be- Frequently contests arise between different classes creditors. of creditors where one set of claimants desires the liquidation to proceed under a voluntary assignment or voluntary mnding-up (in the case of a provincially incorporated company) and the other desires a winding-up under the Act. A winding-u]) Avill only be ordered when it is in the best interests of all the creditors ; in the case of a con- flict between the creditors and shareholders the rights of the former are regarded: Fortin v. Dorchester (1915), Que. 48 S. C. 258. Where an assignment for the benefit of creditors has been made the Court will exercise its discretion in granting or refusing a winding-up order: In re Strathy Wire Fence (1914), 8 0. L. R. 186, and Re Olympia Co. (1915), 25 D. L. R. 620, where the order was refused; so also Re Maple Leaf Dairy Co. (1901), 2 0. L. R. 590, where the applicant was a credi- tor for a small amount. Likewise where the com- pany's affairs are being wound up by a trustee for creditors the order has been refused: Re M. A. Holladay Co. (1915), 7 0. W. N. 321; but see Re Tud- hope Motor Co., (1913-4), 5 0. W. N. 865. In Re International Trap Rock Co. (1915), 8 O. W. N. 461, an order was made though there had been an assignment under which a sale had been directed. See also Re Heyes Bros. (1915), 8 0. W. N. 390; Re Elmira, dc, Co. (1916), 10 0. W. N. 6. POWER OF COURT OX APPLICATION. 719 Where the petitioner is the only creditor desiring Sect. 14. the order and it is not shown that he has a substantial interest the order will not be made : Mardsen v. Min- nekahda Land Co. (1918), 40 D. L. R. 76. When the petition is opposed by the majority of the creditors whose prospects of being paid would be diminished by a winding-up under the Act the order will be refused: i^e Ocean Falls Co. (1913), 13 D. L. R. 265 ; Re Edmonton Breiving, c&c, Co. (1919) , 43 D. L. R. 749. But in a proper case the rights of minority creditors will be regarded : Re Chas. H. Davies S Co. (1907) 9 0. W. R. 993. A single creditor is not entitled to an order where his rights could be as effectively exercised by action and judgment: Re International Electric Co. (1914), 31 0. L. R. 348, 353. The court ^^11 not interfere with a voluntary and order a compulsory winding-up unless it is shown that the rights of the petitioners will be prejudiced by the voluntary liquidation : Re Oro Fino Mines (1898-1907), 7 B. C. R. 388; and in National, Sc, Co., Ltd. (1902), 2 Ch. 34, the Court refused to upset a voluntary ]i(iui- dation and make a compulsory order at the instance of a shareholder, the evidence being insufficient that any benefit would thereby result to the shareholders. In Re Hour/h Lithofiraphing Co. (1915), 8 0. W. N. 377, Suthorhuid, J., following In re Crifjf/lestone Coal Co., Ltd. (1906), 2 Ch. 327, granted a winding-up order at the instance of an unsecured creditor notwithstand- ing that a li(iuidator appointed under the provisions of the Ontario Companies Act bad disposed of the coni})any's assets and had proceeded generally with the liquidation under that Act. Where a petition is not made for a bona fide pur- pose, but merely to serve some collateral object, e.g., to put pressure on the company for repayment of money paid on account of a stock subscription, tha petition will be dismissed: Re A Compami (1917), 34 D. L. R. 396, 27 Man. L. R. 540. Where a petitioner dies l)efore the oixler is granted, an order of i-cvivoi- will be granted to his cxecutoi's: 7l20 DOMINION \\lNl)lNCi-UP ACT. Sect. 14. lie Di/jicror CoUieries Co. (3878), W. N. 199; Re Com- mcrcial Bank of Loudon (1888), W. N. 214. A petition may be amended at tlie hearing: Queen's Benefit BuMing Society (1871), L. R. 6 Ch.^815. And although petition was opened and evidence was gone into leave was given to amend: White Star Consoli- dated Gold Mininp Co. (1883), 48 L. T. 815. See also notes to s. 12. A petition is not allowed to stand over unless clearly necessary: Metropolitan Bailivay Warehous- ing Co. (1867), 15 W. R. 1121. Not even if all parties desire, unless evidence shows such course is desirable : Federal Bank of Australia (1893), 62 L. J. Ch. 564. If an offer were made to pay petitioner's debt and costs, and he afterwards brought petition to a hearing, costs incurred after the offer would not be allowed: In re Times Life Assurance and Guarantee Society (1869),L. R. 9Eq. 382. In England the parties entitled to be heard on the petition are the company, its contributories and credi- tors, yet other people may be heard as amici curiae, but no appeal is allowed them: In re Bradford Naviga- tion Co. (1870), 5 Ch. 600. And a shareholder may appear to support or ob- ject: Be British Nation Life Assurance Association (1872), 14 Eq. 492, 501. In Canada creditors may show cause against or may appear and assist the petitioning creditor, and are entitled to costs of so doing: Re Lake Manufacturing, etc., Co. (1893), 9 M. R. 342, 13 C. L. T. 81; Re Alpha Oil Co. (1887), 12 P. R. 298. Where there are several competing petitions the first applicant whose material is wholly regular will in general have the carriage of the order : Be Farmers Bank of Canada (1910), 22 0. L. R. 556, 558 ;Be Joseph Hall Mfg. Co. (1884), 10 P. R. 485; Be Simpson S Hunter (1916), 34 W. L. R. 850. If, however, the pro- cedure of the applicant first in point of time is irregu- lar, e.g., if he has failed to file the affidavit in support of his petition as required by the rules, the order ^\\\\ be made upon the second petition : Re Belding Lumber POWER OF COURT ON APPLICATIOX. 721 Co. (1911), 23 0. L. R. 255. In Re Estates, Limited Sect. 14. (1904), 8 0. L. R. 564, where there were two petitions, the order was, under the circumstances, made on both petitions, but the conduct of the proceedings was given to the later petitioner, a creditor for money paid to the company under a contract, in preference to a prior petitioner, who was an employee in close touch with the officers and management. See In re The Constanti- nople and Alexandria Hotel Co. (1865), 13 W. R. 851; Re The Commercial Discount Co. (1863), 32 Beav. 198; also Re Joseph Hall Mfg. Co. (1884), 10 P. R. 485. Costs of Petitioner. Until notice of a prior petition, the court will allow petitioner's the costs of all steps taken with a view to presenting *^°®*^- another petition: Re Manitoba Milling Co. (1891), 8 M. R. 426; Ee Building Societies' Trust (1890), 44 Ch. D. 140; Re General Financial Bank (1882), 20 Ch. D. 276; Scott and Jackson (1893), W. N. 184. A creditor presenting a winding-up petition with notice of an earlier one does so at his own risk as to costs, and can recover costs subsequently incurred only if he can show that the first petition was presented mala fide or collusively: Re Manitoba Milling Co. Co. (1891), 8 Man. L. R. 426. If, on the other hand, the second petition was made in good faith and without notice of the first, the second petitioner's costs should be allowed: Re Algoma Commercial Co. (1904), 3 0. W. R. 140. In Re Manitoba Milling Co., supra, the order made was that the second petitioner should have his share of the costs of creditors supporting a winding-up order and the costs of his own petition to and including presentation when he first had notice of the earlier application. See also In re Building So- cieties Trust, Ltd. (1890), 44 Ch. D. 140; Re Enter- prise Hosiery Co. (1904), 4 0. W. R. 57. Any attempt to forestall a bona fide application by a friendly one will not be encouraged, ibid. If any director is attacked in the petition lie appears separately, and if tlie case against liini fails he is D.C.A. — 46 722 DOMINION WINDING-UP ACT. Sect. 14. oiititkHl to his costs: /;/ re Anqln -Greek Steam Co. Uuu.-;;7^n8GG),L.R. 2Eq. 1. '"^"•'^'^f'^^ With rc^'nrd tc^ costs oi' tlu' petition a ii;eiieral rule was laid down by Romilly, M.R., in Be Hmnber Iron Works Co. (18G6), L. R. 2 Eq. 15, as follows : 1. Where the Court refuses to make the order, shareholders or creditors supporting the petition will not have their costs ; shareholders, directors or others opposing the petition will not have their costs unless personally assailed by a charge which is disproved; the company opposing the order will have their costs from the petitioner. 2. Where the Court makes the order, no costs will be given to persons who appear to oppose the peti- tion; and shareholders or creditors who, together or separately, appear to support the petition will get one set of costs between them and only one; the costs of the petitioner and the company will be given out of the estate. This rule was reviewed in various subsequent cases and the practice in England now is to give costs to the petitioner if the petition succeeds, and to the company if it fails ; and further, to give one set of costs to the contributories and one to the creditors who support the winning side. If the petition succeeds these costs are given out of the company's estate, if it fails they are given against the petitioner : Re European Banking Co. (1866), L. R. 2 Eq. 521; Be Peckham Tram Co. (1888), 57 L. J. Ch. 462; Re Wiarton, do., Co. (1904), 3 0. W. R. 393. But some sufficient grounds for appearing must be showm: Be Hull S County Bank (1876), 10 Ch. D. 130; Re Albion Iron Works (1901-4), 10 B. C. R. 351. If payable out of the estate the costs so awarded are a first charge on it : Be Audley Hall Cotton Spin- ning Co. (1868), L. R. 6 Eq. 245; Baden Machinery Co. (1906), 12 0. L. R. 634. In no case will the Court award the costs of a con- test respecting the appointment of liquidator: Re Commercial Bank of Manitoba (1893), 13 C. L. T. 381. See also on costs: 7w re Investment Trust, Ltd. (1904), 1 Ch. 26. POWER OF COURT OX APPLICATIOX. 723 Costs directed to be paid by a company in liquida- Sect. 14. tion are to be paid in full and not proved for : Re Home Investment Society (1880), 14 Ch. D. 167; Madrid Bank v. Kelly (1869), L. R. 6 Eq. 442. If assets are insufificient, costs incurred in winding- up rank after petitioners' costs and before liquidator's remuneration. See In re Massey (1870), 9 Eq. 367. But they rank after costs ordered to be paid by the' liquidator or out of the assets : Re Dominion of Canada Plumhago Co. (1884), 27 Ch. D. 33. Under the old practice a creditor could withdraw a petition even though the other creditors appearing pressed for an order to wind up. If he did, the Court dismissed it with costs, including costs of supporting creditor: Re Times Life Assurance Co. (1869), L. R. 9 Eq. 382; In re Home Assurance Association (1871), L. R. 12 Eq. 59. Or of opposing creditors: In re Patent Cocoa Fibre Co. (1876), 1 Ch. D. 617. See also In re British Electric Tramivays Co. (1903), 1 Ch. 725. By consent a petition might have been withdrawn after the winding-up order had been pronounced but not entered: J u re Croivn Bank (1890), 44 Ch. D. 634. In arranging a withdrawal the petitioner's costs should be paid down, for if an order is simply made for them and the company is subseiiuently wound up, lie only comes in as an ordinary unsecured creditor: Re Adjustable Horse Shoe Company (1890), W. N. 157. Where creditors' petition was ordered to stand over to establish a debt and the del)t was established: Held tliat tlie petitioner was entitled to costs of estab lisbiiiciit of (Icl't as well as of petition: hi re Ralhcay Finance Co. (lS6(i), 14 \V. Iv*. 785. The common oidiT dismissing the petition does not include tlie usual ch.irges conseiiucnt on taking copies of evidence, if snch ai'c to l)c incbnlt'd six'cial grounds must be shown at the liearing and tlic ordci" mnst con- tain a special direction covei'ing I lie matter: In ic I ho. d:c., Co., Lid. (1904), 1 Ch. 26. Whei-e i)etitioners know that they will be opposed by a majority of the creditors and the company's affairs are already being wonnd n|> under the Assign- 724 DOMINION WINDING-UP ACT. Sect. 14. iiuMits Act, on tlu'ir railure to obtain a winding-up order they maj^ be compelled to pay three sets of costs ; one to the company or the assignee, one to the credi- tors, and one to the contributories, if any : Re Olympia (1915), 32 W. L. R. 539, 628 (affirmed (1915), 25 D. L. R. 620). Costs or Liquidator. Liquidator's The general rule is that the liquidator is entitled '"*'''^''" to all the costs of all proceedings properly taken : Re Silver Valley Mines Co. (1882), 21 Ch. D. 381, unless he has done something to make himself personally liable: Salishury, Jones' and Dale's Case, [1895J 1 Ch. 333. See also Re London Metallurgical Co., [1895] 1 Ch. 758, where the authorities on this point are fully discussed. Wliere there are incumbrances and the mortgaged ■ property is realized in the winding up, the liquidator's costs of realization are a first charge, the incumbrances next and the general costs of winding up out of the surplus: Re Oriental Hotels Co. (1871), L. R. 12 Eq. 126; Batten v. Wedgewood, etc., Co. (1884), 28 Ch. D. 317. The solicitor of the liquidator has no claim for costs against the liquidator personally: Re Trueman's Estate (1872), L. R. 14 Eq. 278; Re Anglo-Moravian Co. (1875), 1 Ch. D. 130. Nor has he any lien on the file of proceedings for his costs: Ex parte Pulhrook (1869),L. R. 4Ch. 627. The petitioners' costs are the first charge on the estate even if priority to those of official liquidator: Re Baden Machinery Co. (1906), 12 0. L. R. 634; In re Audley Hall Cotton Spinning Co. (1868), L. R. 6 Eq. 245, which include the costs of establishing his claim; In re Universal Non-tariff Fire Insurance Co. (1875), W. N. 54. And he has them free of set off : In re Gen- eral Exchange Bank (1867), L. R. 4 Eq. 138.. But if a company is in voluntary liquidation the costs of voluntary liquidator are paid in priority to those of petitioner: In re New York Exchange Co., [1893] 1 Ch. 371. As to costs of voluntary liquidator POWER OF COURT OX APPLICATION. 725 at hearing see Re A. W. Ball S Co. (1885), W. N. 190, Sect. 14. ana Mont de Piete of England (1892), W. N. 166. Thi.s priority is only enjoyed by petitioners for tlie winding-up order, not for costs awarded on other pro- ceedings in the winding-up: In re Maiiborough Club Co.; Ex parte Percival (1868), L. R. 6 Eq. 519. Security for Costs. Security for costs may be required where petitioner security for lives out of the jurisdiction : In re Home Assurance As- *'°^*^^- sociation (1871), L. E. 12 Eq. 112. And also where peti- tioner cannot be found at his business address and his solicitor does not know his private address: In re Sturgis {British) Motor Poiver Syndicate (1886), 53 L. T. 715. But if a petitioner out of the jurisdiction has an unsatisfied judgment no security need be given : In re Contract (& Agency Corporation (1887), 57 L. J. Ch. 5. 15. If the company opposes the application on the ground Proceedings. that it has not become insolvent, or that its suspension or !"J-^o^,^.ne^ default was only temporary, and was not caused by any defi- ciency in its a.ssets, or that the capital stock is not impaired to the extent aforesaid, or that such impairment does not endanger the capacity of the company to pay its debts in full, or that there is a probability that the lost capital will be restored within a year or within a reasonable time thereafter, and shows reasonable cause for believing that such opposition is well founded, the court, in its discretion, may, from time to time, adjourn proceedings upon such application, for a time not exceeding six months from the date of the application, and may order an acco\intant or other person to inquire into the affairs of the company, and to report thereon within a ]>erio(l not exceeding thirty days from the date of such order. I{. S.. c. 129, s. 10: .^,2 \.. (■'. 32,' s. 8. Compare Imperial Companies Act, 1862, s. 56. An accountant will only be appointed under the section where there has been a prima facie case of in- solvency made out such as would justify a winding-u]) order: lie Manitoba Commission Co. (1912), 2 D. Jj. R. 1. See also Imperial Steel and Wire Co., Ltd. (1919), 17 0. W. N. 11. 7'26 DOMINION WINDING-UP ACT. Sect. 16. 16. r]>oii llu' srr\iee on tlu' cnniiiaiiy ol' ;iii order iiiiidt; — — under the last preceding sectiim, lor ;iii iiii|uirv into the nlTairs company '^^ ^l^*-' fonipanv. llic president, directors, ollicers and eniploye;.'s and its" of the company and every other i^M-son, sliall respectively huiuirv ^is t'-'^lii'>it t<.> the act'onntant or other person named tor tlie purpose v>rdereH. of makinti- such inquiry, the books of account of the company, and all invc'iitories, papers and vondiers referring to the busi- ness of the company or of any person therewith, which are in his or their possession, custody or control, respectively; and they shall also respectively give all such information as is required by such accountant or other ])erson as aforesaid, in order to form a Just estimate of the alfairs of tlie company. K. S., c. 129, s. 11. Compare Imperial Companies Act, 1862, s. 58. Power of 17. TTpon receiving the repoi't of tlie accountant or person tlio Court ordered to inquire into the affairs of the company, and after Iirinqui^ry.'"*^ hearing such shareholders or creditors of the company as desire to be heard thereon, the court may either refuse the application or make the winding-up order. E. S., c. 129, s. 12. Compare Imperial Companies Act, 1862, s. 59. Staying- Proceedings. Actions IS- The court may, upon the application of the company, against com- or of any creditor or contributory, at any tim{> after tlie ])resenta- sta^^d™^^ ^tion of a petition for a winding-up order and before making the order, restrain further proceedings in any action, suit or pro- ceeding against the company, upon such terms as the court thinks fit. R. S., c. 129, s. 13. See ss. 85, 87 and 163 of Imperial Companies Act of 1862; see also s. 16 (f), Ontario Judicature Act, R. S. O. (1914), c. 56. A restraining order to prevent the execution by- judgment creditors of process against the company can only be applied for after the presentation of the petition, and such petition can only be presented after four davs' notice: Be Eldorado Union Store Co. (1886), 18 N. S. R. 6 R. & G. 514. The enforcing of an execution is a ''proceeding " under the section: In re Artistic Colour Printing Co. (1880), 14 Ch. D. 502; In re Tohique Gypsum Co. (1903), 6 0. L. R. 515. See also the notes under s. 22. A creditor within the jurisdiction will be restrained from proceeding with an action beyond the territorial STAYING PROCEEDINGS. 727 jurisdiction of the Court : hi re International Pulp and Sect. 18. Paper Co. (1876), 3 Cli. D. 594; re Tobique Gypsum Co., supra. In those provinces whose codes of procedure do not contain any provision for staying proceedings analo- gous to s. 16 (f) Ont. Jud. Act, supra, the application under this section will be made ex parte to the judge before whom the winding-up petition is pending for an injunction restraining any actions or proceedings against the companv wheresoever pending : Re London & Suburban Bank Co. (1871), 19 W. R. 950. Where a provision as to stay of proceedings analo- gous to that above quoted obtains, the proper course is to apply by motion ex parte to the Court in which the action to be stayed is pending and that Court will upon the usual undertaking as to damages being given, stay further proceedings till the hearing of the peti- tioA: Re General Servke Co., [1891] 1 Cli. 496; Mas- bach V. Anderson (1877), 26 W. R. 100; Rose v. Gard- den (1877-8), 3 Q. B. D. 235. Usually the application is made on notice to the plaintiff in the action or suit, but in a proper case the order may be made on an ex parte application : In re Tobique Gijpsum Co., supra. The latter is the practice in England, vide the cases cited supra. The application may be made in Chambers, ])ut it is questionable whether the Master-in-Chambers would have jurisdiction. In cases of actions in foreign Courts, or of distress or sale, application would be made to the Court ()r Judge before whom the winding-up petition is pending for an injunction to restrain tJie proceeding till the hearing of the petition. If the application to restrain is made in the name of the company some responsible person must give the usual undertaking as to dam- ages: Westminster Assn. v. Upward (1880), 24 Sol. J. 690. For forms of orders, see Palmer's Company I'lccc dents, Part TM, 1 Uh ed., pp. 473 ff. The better practice is for the order to specify each action or prooocdiim- in which the proceedings are to 7*28 DOMINION WINDING-UP ACT. Sect. 18. be restrained, but an order in genei-al terms will not be invalid: In re Tohiqne Gypsum Co., supra. Where the sheriff had, notwithstanding an order staying proceedings, proceeded with a sale under an ex- ecution against tlie lands of the company in the Prov- ince of New Brunswick, and had executed a deed to the purchaser, it was held that there was no jurisdiction in the Court to make an order under the Act summarily declaring the sale void so far as the purchaser and a mortgagee of the purchaser were concerned. Moss, C.J.O., stated that it would be different as regards the execution creditor, and perhaps the sheriff, ibid. Court may 19. Tlie coiirt may, upon the application of any creditor or ing-uD^pro- contributory, at any time after the winding-up order is made, ceedings. and upon proof, to the satisfaction of the court, that all pro- ceedings in relation to the winding-up ought to be stayed, make an order staying the same, either altogether or for a limited time, on such terms and subject to such conditions as the court thinks fit. E. S., c. 129, s. 18. . A winding-up order. once pronounced can be got rid of in three ways : — {a) Before the order is entered the petition may be withdrawn and the order rescinded, assuming that there is only one petitioner: In re Crown Bank (1890), 44 Cli. D. 634. Once entered the Court has no juris- diction to cancel it, except under special circumstances, e.g., where it was obtained by fraud or concealment of material facts: In re Equitable Loan Co. (1903), 6 0. L. R. 26, 31, and cf. McNabb v. Oppenheimer (1885), 11 P. E. 214. (b) The order may be appealed against; see the notes to ss. 101 and 104. (c) An application may be made under s. 19 by any creditor or contributory (but not by the company: Re Baxters, Ltd. (1898), W. N. 60) that all proceedings under the winding-up order may be stayed. The Court has a discretion as to whether the stay should be granted, whether it should be absolute or limited and as to the terms and conditions thereof. The principles on which the Court will act in the exercise of its jurisdiction with reference to staying STAY OF WINDING-UP PROCEEDINGS. 729 proceedings under a winding-up order are stated by Sect. 19. Buckley, J., in Re Telescriptor Syndicate (1903), 2 Ch. 174, at p. 180, to be the same as where an application is made in bankruptcy to rescind a receiving order or annul an adjudication in bankruptcy where "The Court refuses to act on the mere assent of the creditors in the matter, and considers not only whether what is pro- posed is for the benefit of the creditors, but also whe- ther it is conducive or detrimental to commercial mor- ality and to the interests of the public at large. The mere consent of the creditors is but an element in the case." In exercising its discretion the Court will have regard to such facts as :— that there has been an undis- closed agreement between promoter and vendor pro- viding for participation by the former in the share con- sideration payable on the sale; that tliere has been a gift of paid-up shares to the directors; that there are other matters connected with the promotion, formation or failure of the company, or the conduct of its busi- ness, which appear to call for investigation. A stay may properly be asked for where some scheme of re-organization is contemplated: Marine Investment Co. (1873), 8 Ch. 702. So also where a large number of the creditors de- sired that the liquidation should proceed under some form of voluntary liquidation already entered upon {e.g., in Ontario under the Assignments and Prefer- ences Act) as being more expeditious and inexpensive a stay was granted under the section : Be B elding Lum- ber Co., Ltd. (1011), 23 0. L. K. 255. In this case tlie stay was until the Court should further order :m ap- plication of any creditor upon notice. Where a shareholder obtained in Manitoba a wiiid- ing-uj) order against a company incorporated in that province, but having the major part of its asseta, in Saskatchewan, and carrying on business in the United States, where on order of adjudication in l)ankruptcy had been made against it, the majoiity of the creditors and shareholders ai)i)li(-d lor a stay. All the unsecured creditors had proved tlieir clainis in the bankruptcy court. It was hold that once everything necessary was 730 DOMINION WINDING-UP ACT. Sect. 19. aecom]")lisluMl to make tlic assots of the company not (-„„,.( „,.,v vested in the trustee in bankruptcy avaihible for the stav wind"- Canadian creditors pari passu with the creditors in the .•.>r.iii,!;<. United States notliing- further shoukl be done under the order until it became necessary to take some action in aid of the bankruptcy proceedings : Re Stewart S Mat- thews (1916), U W. L. R. 47, (1916) 26 Man. L. K. 277. A stay may be granted pending the preparation of a complete list of contributories : Re Banque St. Jean (1908), 10 Que. P. R. 223. In Re Installations, Ltd. (1913), 14 D. L. R. 679, a stay was granted until the trial of an interpleader issue which had been pending. Compare the Imperial Companies Act, 1862, s. 89, and see the following cases illustrating the conditions under which such stay will be granted: Ex p. Barber (1849), 1 Mac. & G. i76; Re Worcester, etc., Ry. Co. (1850), 3 De G. & Sm. 189; Re South Barrule Co. (1869), L. R. 8 Eq. 688; Careiv'sCase (1854), 5 D. M. & G. 94; Underivood's Case (1854), 5 D. M. & G. 677; Clifton's Case (1854), 5 DeG. M. & G. 743; Re Conti- nental Bank (1867), 15 W. R. 548; Re European Ass. Co. (1872), W. N. 85. And as to costs see Clark's Case (1854), 1 K. & J. 22; Ex p. Woolmer (1851),. 5 DeG. & Sm. 117. Effect of Winding-up Order. Company to 20. The company, fi'oiu the time of the making of the business. winding-up order, .shall cease to carry on its business, except in .so far as is, in the o])inion of the liquidator, required for the beneficial winding-up thereof; but the corporate .'jfate and all the corporate powers of the compan)% notwithstanding it is otherwise provided by the Act, charter or instrument of incor- poration, .shall continue until the affaii's of the company are wound up. h. S., c. 129, s. 15. Compare Imperial Companies Act, 1862, s. 131. On the making of a winding-up order the liquidator appointed by the Court takes over all the assets which are in the possession of the company, and the com- pany's business ceases to be carried on except for the purposes of the liquidation. The corporate character, however, of the company continues : L. Soucy v. Com- EFFECT OF WINDING-UP ORDER. 731 pagnie d'Imprimerie Indiistrielle (1902), Que. 5 P. R. Sect. 20. 195; as do also its corporate powers, e.g., the power to sue ; though such powers must be exercised by the liqui- dator under the authority of the Court: Kent v. Com- ^rmnaute des Soeurs de la Providetice (1903), A. C. 220. The liquidator must sue in his own name when he acts as the representative of creditors and contributories, in that of the company when he is recovering its debts or its propertv, ibid.: Wm. Hamilton Mfg. Co. v. Ham- ilton Steel, £c., Co. (1911), 23 0. L. R. 270, 282. See also International Mining Syndicate v. Steivart (1914), 48 N. S. R. 172. If there is any doubt it is prudent to join l)oth the company and the liquidator as co-plaintiffs. On the appointment of the liquidator the powers of the directors cease, s. 31 ; except as continued under that section. The winding-up relates back to the date of service of the petition, s. 5: Bank of Hamilton v. Kramer Irwin (1912), ID. L. R. 476. After a winding-up order the power of collecting the assets of the company is vested solely in the liqui- dator: Shaver v. Cotton (1896), 23 A. R. 426 at 429 and ^U^Bank of Hochelaga v. Garth (1886), 2 M. L. R. (S.C.) 201; Bichards v. Producers Bock d Gravel Co. (1914), 17 D. L. R. 588; Victoria-Montreal Fire, £c., Co. V. Derome (1902), Que. 21 S. C. 319. After the winding-up order lias been made new rights are given by the Act of Parliament — rights which did not exist before the winding-up, and rights wliicli can be enforced (»iil\ under llif winding-up: In re National Fioids As.snrance Coinpang (1S7S). 10 Cii. I), lis, 125. The Statute of Limitations doc- not run against a ci-cditoi- after the order has been made: In re General Boiling Stock Coni/ning, Join' Slock Discount Co.'s Claim' (1872), L. H. 7 Cii. 646. Tiie order millifies as between the conqiaiiy and its credi- tors all contracts for interest: In re Internationdl Con- tract Company, Hughes' Claim (1872), L. R. 13 Eq. 623, unless there should turn out \n l>c w s\\\\)\\\< «»f assets. 7;vj 1)()]\[INI0N WINDING-UP ACT. Sect. 20. ElTcft of wiiuiiiiir-iip order. Effect on existing contracts. After ;i wiiiding-uii ordor lias been made a judg- ineiit creditor of the company cannot bring an action nnder R. S. 0. 188G, c. 157, s. 61, against a contributory for pajTiient of the amount unpaid on his shares: ShavevY. Cotton (1896), 23 A. R. 426. As the section operates only from the time of the making of the order, qncere whether a payment made by the comi)any on the day of the service of the wind- ing-up petition, the order being made five days later, is made after- the commencement of the winding-up ; and if so, whether by reason of that, though not objectionable under other sections of the Act, it ought to be set aside: Trusts & Guarantee v. Munro (1909), 19 0. L. R. 480, 487 and 488. Contracts are not necessarily terminated by the mere fact of liquidation : Hamilton Mfg. Co. v. Hamil- ton Steel, dc., Co. (1911), 23 0. L. R. 270. Where a trust company under arrangement with a client is entitled to retain as its remuneration a per- centage of the return on an investment made by it for the client, on the insolvency of the trust company the benefit of the arrangement passes to the liquidator who will not be compelled to surrender the security to the cestui que trust; nor will the Court appoint a special trustee for carrying the arrangement into effect: Re Dominion Trust Co. and Harper (1915), 24 D. L. R. 670. If a liquidator sells goods previously purchased by the company under a conditional sale agreement the unpaid vendor is entitled to recover out of the estate the full amount due under the agreement : In re Cana- dian Camera & Optical Co., A. R. Williams' Co. Claim (1901), 2 0. L. R. 677. Where a lessee from the company had an option to purchase the property, the winding-up did not cut down his rights. The company was held liable in dam- ages to the lessee by reason of the sale of the property by the liquidator without giving the lessee an oppor- tunity of exercising his option: McCarter v. York County Loan (1907), 14 0. L. R. 420. EFFECT OF WINDING-UP ORDER. 733 If the liquidator elects to perform a contract pre- Sect. 20. viously entered into by the company he can compel the other party likewise to carry it out : Mersey Steel . R. 2' TT. I.. 325; Tennent v. (ilasgow Bank (1S79), 4 App. Cas. 615. liabilities. 7o4 DOIVIINION W1M)1N(!-ITP ACT. Sect. 20. At'lcr llio order lie can no ioniser sue the c(>in])any lor a misrepresentation by which he was iiuhiced to take the shares: Houldsivorth v. ('//// of (Uasfjoiv Bank (1880), 5 App. Cas. 317. Nor for breach of conti-act in issuing- shares at a discount in pursuance of an agree- ment to issue fully paid up shares : In re Addlestone Linoleum Co. (1887), 37 Ch. 1). 191. But any person who has entered into an agreement with the company, otlier than agreement to take shares, may if an action be brought against him for a breach of an agreement, even after the winding-up, plead by way of defence that he was induced to enter into the contract by the fraud of the directors : In re Monarch Ins. Co., Gorrissen's Case (1873), L. R. 8 Ch. 507, 516. Contiugent Tlic w4nding-up order mil not prevent a contingent liability on the part of the company from ripening into a debt ; therefore the holder of a fire policy issued by a company may prove in the winding-up for the full amount of loss covered by the policy, though the fire occurred after the date of the winding-up order : In re Northern Counties of England Fire Ins. Co., Macfar- lane's Claim (1880), 17 Ch. D. 337. Date of dis- • Where the liquidators have not obtained leave to f'liurico of liabilities. Carry on the business of the company, their only duty is to wind it up, and they are bound to distribute the assets according to the liabilities as they exist at the date of the stoppage; they cannot alter those liabili- ties bv making a fresh contract : In re East of England Banking Co. (1868), L. R. 4 Ch. 14. Effect on It has been held in England that a provision in the articles that a call should not be made without the consent of three-fourths of the shareholders, does not apply to a call made in the winding-up : In re Coed Madog Hlate Co. (1877), W. N. 190. Nor does a pro- vision as to the instalments by which calls are to be payable: In re Cordova Union Gold Co., [1891] 2 Ch. 580. But see s. 59 and notes of this Act. Provisions in the articles as to interest upon calls do not apply to calls made in the winding-up: In re Welsh Flannel and Tiveed Co. (1875), L. R. 20 Eq. 360. articles. TEAXSFERS OF SHARES VOID. - 735 21. All transfers of shares, except transfers made to or witli Sect. 21. the sanction of the liquidator, under the authority of the court, ~ ■ ;^ and every alteration in the status of the members of the company, shares void. after the commencement of such winding-up, shall be void. R. S., c. 129, s. 15. Compare s. 131 Imperial Act, 1862. Transfers of shares are forbidden after the com- mencement of the ^^indino■-up, i.e.^ the date of service of the notice of presentation of the petition, s. 5. The Act contains no provision as to when tne winding-up commences where the application for winding-up is by the companv, for in that case no notice is required, s. 13(2). As to "alteration in the status of the niemhers" see Pahner Precedents (1912), 11th ed.. Part II, p. US. After a winding-up a transfer of shares may be made with the saiiction of the liquidator acting under the authority of the Court: Redfern v. Poison (1894), 25 0. R. 321.' Compare s. 34. See Ex p. Taylor (1877), W. N. p. 136; Pacaud v. Fournier (1883), 10 Q. L. R. 54. The leave of the Court will only be granted upon special grounds : In re Omvard Building Society (1891), 2 Q. 11 D. 463. The general scheme of the Act is that " ' as the tree falls so it must lie,' unless the Court chooses to alter the existing state of things," per Bowen, L.J., ib., at p. 482. The licjuidator alone is powerless to accept trans- fers void under s. 21 ; nor will tlie fact that he has in- advertently placed Ihc names of the transferees on llie list of contributories and obtained a jiidgnicnt against the transferees release the transferors: Re Ontario Ravk, Massey S Lee's Case (1912), S 0. I.. P. 243. The applicafion (A' the section is limited to trans- fers of siiai'es and allcijilion of flio status of inoniboi's: Tntsfs (('■ diinraiilr,' ('(,. v. Miniro (1!MI9), 19 ( ). L. P. 4ftn, 487 and 488. 22. After the winding-up order is made, no suit, action or AftiT wind- other proceeding shall be proceeded with or conunenced against '"K:"i'<"'(I<'r. the company, except wit,h Ihe leave of the conrt and snbjeei to ,,j,j,j„^i ,.,„„. sncli terms as the court imposes. 1?. S., c. 129, 8. ]fi. pi'iiy stiiyed. Compare imperial Coin))anies Act, 1HG2, s. 87. 'lo6 DOMINION WINDING-UP ACT. Sect, 22. The Court will not allow its adniiiiist ration of Actions assets to be interfered with by other proceedings a^-ainst affecting the estate ; and creditors of such estate must stayo.i. " bring their rights into the Master's office, which the Act substitutes for proceedings at law : Clarke v. Union Fire Insurance Co., Caston's Case (1884), 10 P. R. 339. See also Graham v. Casselman (1893), Q. R. 4 S. C. 91. The section must be read with section 133 of the Act which lays down the general rule that all remedies to enforce claims against the estate are obtainable by summary petition and not by action. The leave to proceed with or commence an action provided for in s. 2'2 is obtainable only where there are such excep- tional circumstances present as justify its being granted: Re Raven Lake Portland Cement Co., Na- tional Trust V. Trusts £ Guarantee (1911) 24 0. L. R. 286, and where nothing more than the amount and ordi- nary questions of fact and law are involved that is not enough: Re J. McCarthy £ Sons (1916-7) 38 0. L. R. 3; 32 D. L. R. 441 (App. Div.). The section should further be compared with s. 84, which, as regards the proceedings to which it applies, viz., those of a judicial nature, has a retroactive effect. Section 22, on the otner hand, while general in its application, only affects pro- ceedings taken after the winding-up order has been made. Those taken before will not be affected unless they are caught by s. 84: E. C. Colwell Candy Co. (1899-02) 35 N. B. R. 613. See further the notes to s. 84. The Court having charge of the winding-up is a Dominion Court and the operation of s. 22 extends to any province in which proceedings are sought to be taken. Thus it will prevent an action being brought against the company or its liquidator in another prov- inr-o without loavo from the Court which has charge and control of the winding-up proceedings, i.e., the Court which made the winding-up order: Stewart v. Lepage (1916), 53 S. C. R. 337; E. J. Carson & Co. v. Montreal Trust Company (1915), 49 N. S. R. 50; Blais V. Bankers' Trust Corporation (1913), 14 D. L. R. 277; Re Hohhs and Kennaheek, Sc, Co. (1918), 14 0. W. N. ACTIONS AGAINST COMPANY STAYED. 737 358, and see Plante v. Dahnas Pulp Co.. (1914), 20 D. Sect. 22. L. E. 983. - Ignorance of the existence of the mnding-iip order made in another province will not help the plaintiff, except possibly as to costs : Lavell v. Canadian Mineral Rubber Co. (1914), 14 D. L. R. 521, 523. There is jurisdiction under the section even with regard to actions outside the ordinary territorial juris- diction of the Court having the conduct of the wind- ing-up: In re Tobiqiie Gypsum Co. (1903), 6 0. L. E. 515, 518; and" the Court has restrained an action in the Courts of another province against the insolvent company and its liquidators : Baxter v. Central Bank (1891),20O. E. 214. A suit cannot be entered against the liquidator no suit, without leave: Bobillard v. Blanchet (1901), Q. E. I9^tf,°°p;j. S. C. 383, and see the cases cited supra; but the section ceeding. does not prevent a defendant from taking without leave the necessary steps to defend himself in an action brought against him by the liquidator or the company in liquidation, e.g., an application to set aside a con- current writ of summons for service out of the juris- diction and service thereof: Frid Lewis Co. v. Homes et at. (1914-5), 8 Sask. L. E. 185. Nor does the section prevent a sheriff from making a return of nulla bona to a writ of execution issued and received before the making of the winding-up order, for that is not a " proceeding " within the section: Pukidski v. Jardine (1912), 26 0. L. E. 323; (1912), 5 1). L. 242. The sec- tion does not cover obligations incurred by the liqui- dator in tlic course of the liquidation: Be Scott v. Silver (1915), 8 0. W. N. 552. In the last mentioned case Middleton, J., dismissed a motion for an order prohibiting the enforcement of a judgment against a liquidator garnishee where leave to sue the liquidator had not been obtained. AVliei-e a judgment had been reserved in the case the deiibcre was discharged upon a winding-up order being made: MoIJnrrw Iji Cic dc PiiJ/x' ( 1887), 3 M. L. E. (S. C.) 273. D.C.A. — 47 738 DOMINION WINDING-UP ACT. Sect. 22. Ill orilor to distrain after a winding-up order has been granted leave is necessary, for a distress is a " proceeding " witliin the section: In re OtUiwa Force- lain cO Carlwn Cu. (11)00), 31 O. K. G79, G89. See fur- ther the notes to ss. 23 and 84. Secured Mortgagees or bondholders can not proceed to creditors. euf orce tlicir remedies without leave : Re Winnipeg S Western Development Co. (1915-16), 3^ W. L. R. 749, though in British Columbia Tie S Timber Co. (1907-9), 14 B.C.R. 81, Clement, J., refused to interfere with a mortgagee's sale proceedings on the ground that he was not proceeding in defiance of s. 22, but this ease seems to be opposed not only to the authorities elsewhere but also to In re The Lenora Mount Sicker Co. (1900-3), 9 B. C. R. 471, decided in the same prov- ince. See also Re Dominion Milling Co. (1912), 3 D. L. R. 897; 3 O.W.N. 1618. The matter is further considered infra, and under s. 133 and in the notes to s. 69 of the Companies Act under the heading 'Bonds.' i:ffect of the All actiou brought without leave will be dismissed Siftho'Ji'zed ^^ Quebec on exception to the form: Marcotte v. Tur- proceedTngs. cot (1901-2'), 4 Q. P. R. 34,2;Soucy V. Electric (1902), 5 Q. P. R. 105. In Ontario a motion to dismiss such an action for want of prosecution was refused on the ground that the section imposed an absolute stay: Duke V. Ulreg (1909), 14 0. W. R. 392. In Blais v. Bankers' Trust Corporation (1914), 14 D. L. R. 277, and Lavell v. Canadian Mineral Rubber (1914), 14 D. L. R. 521, it was held that an action commenced without leave being irregular only should be stayed, until leave was granted; so also to the same effect: Stewart v. Lepage (1916), 53 S. C. R. 337, and H. J. Carson S Co. v. Montreal Trust Company (1915), 49 X. S. R. 50. Sale proceedings commenced without leave were permitted to be carried on on terms with- out being required to be commenced anew : Re Winni- peg & Western Development Co. (1915-6), 33 W. L. R. 749. A garnishee summons depending on an unautho- rized action is ineffective and will be set aside : Lavell v. Canadian Mineral Rubber, supra. ACTIOXS AGAINST COMPANY STAYED, ' 739 Leave to continue an action is a matter of discre- Sect. 21. tion and leave has been granted to enable the plaintiff to enforce the statutory remedy against directors which involves the need of a judgment and execution against the company with a return of the sheriff: Risle?- v. Alberta Newspapers, Ltd. (1919), 46 D. L. R. 536. A judgment entered against the company after a winding-up order has been made is wholly void and nugatory: Keating v. Graham (1894), 26 0. R. 361; Graham v. Casselman (1893), Q. R. 4 S. C. 91. For distresses, attachments, etc., which are speci- Distress. ally dealt with in s. 23, see the notes to that section, etc!^*^^"^^" " An undertaking by a provisional liquidator in posses- sion to pay a landlord's claim for overdue rent in pre- ference to the claims of other creditors, where the landlord has taken no steps to assert his claim until after the winding-up has beg-un is, owing to ss. 22 and 23, void, unless the permission of the Court is first obtained: Fiiches v. Hamilton Tribune (1884), 10 P. R. 409. A different view seems to have been taken by Morrison, J., in Plummer v. Sullivan Machinery (1917), 2 W. W. R. 229; 24 B. C. R. 104. There ven- dors of machinerv under contract of conditional sale whereby the property remained in them until payment, and wlio had complied with s. 76 (the liquidator not having complied with s. 77), seized and re-sold the machinery, and an action bi'ought hx the liijuidator U)Y wrongful seizure, was dismissed. Moi-rison, J., ob- served that the sections of the Act as to restraining actions and not allowing them to proceed are intended, not foi' the i)ur])()S(' of liarassing or impeding or in- juring third parties, but for the purpose of preserving tlie limited assets of the company in the best way for distribution among creditors who may be entitled thereto. A])p]ication for leave (after an order of delegation .vppiicution has Ix'cn made under s. 110) should, s;i\'(' iiM'xceptioiial cases, be mjidf 1<» I he Master or b'cferee : Re ./. Mc- Carihjf (& Sons (1916-7), 38 0. L. b\ 3; 32 D. L. R. 441, per ITodgins, J. A. Hitherto ap])lications have fre- quently been made to n .TiKlu'f in ( 'h.-nnbcrs not ojily in 740 luiMlXION WINDING-UP ACT. Sect. 22 Ontario, but in tlie oilier provinces. A County Court t)u(li;o lias no jurisdiction under tiie section: Goldrich V. Colovial As'siirancc Co. (191G), 28 D. L. E. 542. The application must be made to the Court in Can- ada which has the conduct of the winding-up, even though the application is for leave to continue an action begiin before the winding-up in a province other than that in which the winding-up is proceeding : Bretvster v. Canada Iron (1914), 7 0. W. N. 128. See also Plante v. Dalmas Pulp Co. (1914), 20 D. L. E. 983. Leave, however, is obtainable in Ontario to sign final judgment against a company incorporated in England, having its head office there and being in process of liquidation there, but doing business and having assets in Ontario: Plummer v. Superior, dc, Co. (1885), 10 P. E. 527. Leave having been gralnted, the Exchequer Court is competent to entertain an action in rem against a ship for collision, its jurisdiction not being taken away by ss. 22 & 23 : The R. & 0. Nav. Co. v. SS. Imperial (1908-9), 12 Ex. Ct. 243. Discretion The effect of s. 133, where it applies, as to which ieavr°^ see the notes to that section, is to make special grounds necessary to be shown in order to justify the granting of leave under s. 22 : Re Raven Lake Cement Co., Na- tional Trust V. Trusts S Guarantee (1911), 24 0. L. E. 286; Re J. McCarthy £ Sons (1916-7) 38 0. L. E. 3; 32 D. L. E. 441 (App. Div.). Thus where in addition to the claims of the appli- cant and of the liquidator an interest in the assets in question was alleged by a mortgagee, who would not be bound by the determination of the issue as between the liquidator and the claimant by summary proceedings under s. 133, Mulock, C.J.K.B., in Kurtz v. McLean (1908), 11 0. W. E. 437, made an order that if the mort- gagee was unwilling to come in under the winding-up proceedings, leave should be granted to bring an action. After ail order for winding-up of a Manitoba company, P., a servant of the company, asked leave to bring an action against the company for arrears of wages so that after a return of nidla bona he might ACTIONS AGAINST COMPANY STAYED. 741 sue the directors under s. 276 of the Manitoba Com- Sect. 22. panics Act. Leave was granted : Re Lake Winnipeg ~ Transportation Co. (1891), 7 Man. E. 602. Where previously to the ^\dnding-up a shareliolder had been sued by the Company for unpaid calls and had delivered a defence and counterclaimed for the can- , cellation of his subscription on the ground of misre- presentations in the prospectus, the sharoliolder's ap- plication for leave to proceed in the action was refused on the ground that he could have in the A\inding-up all the relief claimed in the action: Be Pakenham Pork Packing Co. (1903), 6 0. L. R. 582. But where a share- hohler had sued for canceHation of his subscription on the ground of fraud, and costs had been incurred and the action was on the list for trial, leave was granted in Quebec: Johnson v. The Eivart Co. (1907), Q. R. 31 S. C. 336. Where, although the amount to be claimed in the proposed action is considerable, but nothing more than the amount and ordinary questions of fact and law are involved, leave is not to be granted : Be J. McCarthy & Sons (1916-17), 38 0. L. R. 3; 32 D. L. R. 441 (App. Div.). So also an application was re- fused for leave to bring an action to set aside stock subscriptions on failure of the applicant to show such special and unusual circumstances as to make it reason- ably clear that the Master could not satisfactorily deal with tlie question: Titherington v. Distribntors (1906), 8 0. W. R. 329. Where an action has already been dismissed and has become barred by lapse of time when the winding- up order is made a new action should not be autho- rized: (ioldrlcli V. Colonial Assurance Cd. (191 6), 28 I). L.-R. 542. An appeal lies from an order made under s. 22. Aim'-'.>' giving leave to bring an action: nr J. Mciartlig (i" ,mll), 'lA (). J.. R. 28G; Re Tormilo Cream and Buiter Co. (UK)9), 14 O. W. R. 81. Where leave had been i»-i'aiited to the ai)plicaiit to sue the conii)aiiy for speeilie piMi'oriiiance of an agreement for exchange of lands, or in default for cancellation of the agreement and recovery of the applicant's lands, of which the company was in possession, the Master's discretion in granting leave was held on appeal to have been pro- perly exercised: Re Transcontinental ToivnMte Co. (1915), 21 D. L. R. 291 ; 25 Man. L. R. 193. The discre. tion may be reviewed on appeal: Re Cnshinr/ Sulphite Fibre Co. (1906-8), 38 N. B. R. 581. Moreover, where the order appealed from was made on a wrong prin- ciple it was set aside by the Ontario Court of Appeal: Re J. McCarthy d Sons (1916-7), 38 0. L. R. 3; 32 D. L. R. 441. The rule, however, that an exercise of a discretion proceeding on proper principles is not generally to be interfered with, still stands, ihid., per Meredith, C.J.C.P. Application When the Court is asked to stay an action, the tj^^tay^pro- only material question to be considered is, whether there are any circumstances which render it necessary that the action should be continued, or whether the claim of the plaintiff is not one which can be as easily dealt with in the winding-up as in any other way. If the claim sought to be enforced is capable of being satisfactorily dealt with in the winding-up other pro- ceedings to enforce it will be stayed: In re Hermann Loog, Limited (1887), 36 Ch. D. 502; In re Interna- tional Fidp S Paper Co. (1876), 3 Ch. D. 594; In re Australian Direct Steam Navigation Co. (1875), L. R. 20 Eq. 325 ; Re Briton Medical Assurance Association (1886), 32 Ch. D. 503. See also the cases supra and the notes to s. 133 of the Act. After a winding-up order had been made. P., a resident of Ontario, brought an action against the company in the State of Michigan, to attach certain property of the company there. The liquidator brought an action in Ontario for an injunction to restrain P. from proceeding with his action in Michigan. Held, ACTIONS AGAINST COMPANY STAYED. 743 that this case conkl not be distinguished in principle Sect. 22. from Ex parte Railway Steel and Plant Co., In re '~~~ Taylor (1878), 8 Ch. D. 183, and upon the i'acts dis- closed the injunction was refused and P. was allowed to continue his action in Michigan : In re Lake Superior Native Copper Co., Ltd., Re Plummer (1885), 9 0. R. 277. If the Court is of the opinion that the action ought not to be stopped, e.g., where an action is in- stituted against directors and other individuals as well as against the company, the Court will allow the proceedings to go on, but will require the plaintiff to undertake not to issue execution against the company without leave of the Court: McEwan v. London and Bombay and Mediterranean Bank (1866), W. N. 407; Eagcll V. Ciirrie (1867), W. N. 75. Secured creditors such as mortgagees and bond- Mortgagees holders are in a different position. A mortgagee will h°uie\°°^' not generally be restrained from enforcing his rights against the mortgaged property : Lloyd v. Bavid Lloyd & Co. (1877), 6 Ch. D. 339 ; Re Lonyendale Cotton Spin- ning Co. (1878), 8 Ch. D. 150; Re CusJdng Sulphite Fibre Co. (1906-8), 38 N. B. R. 581. It is otherwise where there is only an equitable charge and not a mort- gage : Andrews v. Swansea (1880), 50 L. J. Q. B. 428. In general the secured creditor has a right to apply for and obtain leave to bring an action or take sale pro- ceedings: In re The Lenora Mount Sicker, dc., Co. (1900-3), 9 B. C. R. 471; Re Winnipeg S Western Be- velopment Co. (1915-6), 33 W. L. R. 749. Terms may be imposed, e.g., in the last mentioned case successive adjournments were ordered conditionally on tlic com pany's making certain payments of arrears of interest and taxes with a view to protecting the company and fx-rmitting the assets to be sold. The liquidator, how- ever, is not entitled to the conduct of a sale under foreclosure proceedings, and an order made at ]iis instance by the Judge directing the winding-up pro- ceedings postpcming tlie sale and directing the referee to advertise and fixing a su1)sequent date for sale, was held to be bad: Re Cashing Sulphite Fibre Co. 744 DOMINION WINDING-UP ACT. Sect. 22. (1906-8), 38 N. B. R. 581. The fact that prior to the winding-up order judgments against the company have been registered will not disentitle a mortgagee or bond- holder from obtaining leave to proceed to enforce his security: Re Giant Mining Co. (1901-4), 10 B. C. R. 327 While the bondholders will be permitted to proceed unless any special reasons are shown to the contrary, the Court has a discretion to grant or refuse leave, and in Re Martin International Trap Rock Co. (1915), 8 0. W. N. 599, a delay was ordered to enable the liqui- dator to sell the assets. Moreover, where a bs^nd- holder's application for leave to commence an action is opposed by the majority of the bondliolders, the Court has refused leave : Re Excelsior Brick Co., Ltd. (1916), an unreported decision of Middleton, J. See further s. 133 and the notes to s. 69 of the Com- panies Act, under '' Bonds " and '* Receivers. 11 Execution, 23. Every attachment, sequestration, distress or execution etc., against p^f; [y\ force against the estate or efTects of the company after void ^liG making of the winding-up order shall be void. J{. S., c. 129, s. l?.*^ Compare s. 18 of this Act, and see notes to that section. Compare ss. 163 and 198 of Imperial Companies 7Vct, 1862, (the last named section is not in the Cana- dian Act), but the Act has been construed to have the same effect as though it contained such a section: Shaver v. Cotton (1896), 23 A. R. 426; Re Exhall Min- ing Co., 4 DeG. J. & S. 377. Section 163 (now s. 211 of the Imperial Act of 1908) corresponds to our section 23, and section 87 (now s. 142 of the Imperial Act of 1908) corresponds to our section 22. The two sections nmst be read together. The result, accordingly, is that only every attachment, sequestration, distress or execution " put in force " after the vvdnding-up order is void, and even the putting in force is void only if leave has not been obtained under section 22 : Risler v. Alberta Neivspapers, Ltd. (1919), 46 D. L. R. 536, 538. EXECUTIOX, ETC., AGAIXST COMPANY VOID. 745 In the English Act, s. 163 is controlled by s. 87, and Sect. 23. the Court has declared itself competent to allow attach- ments, distresses, etc.: Ex parte Carnelly (1887), 35 Ch. D. 656. But this power is not exercisable by Canadian Courts owing to the provisions of s. 84. Per Osier, J.A., in Shaver v. Cotton (1896), 23 A. R. at p. 435. Sed qu. at anv rate as regards a distress: In re Ottawa Porcelain S Carbon Co. (1900), 31 0. R. 679, 689, where it is indicated that leave may be granted. If there is no right to prove, rights under a distress made before the order will be preserved, ibid, at p. 690, citing Re Army & Navy Co., January 11, 1898, un- reported. See also E. C. Colivell Candy Co. (1899-02), ^ 35 N. B. R. 613. The section will apply in all provinces where the company's assets may be situate: Re Producers' Rock & Gravel Co., Ltd. (1913), 14 D. L. R. 289. The opera- tion of the section is limited to creditors of the com- panv, and it does not apply to outsiders: Good v. Nepisiquit Lumber Co. (1911-13), 41 N. B. R. 57; /w re Regent United Service Stores (1878), 8 Ch. D. 616. It appears that the term " sequestration " as used Sequestra- in s. 23 means sequestration to recover payment of a judgment already obtained: Richelieu S Ontario Na- 'rigation Co. v. SS. '' Imperial " (1808-9), 12 Ex. Ct. R. 243; but see Re Australian Direct Steam Naviga- tion Co. (1875), L. R. 20 Eq. 325. An undertaking by a provisional liquidator L:iii(ii..i(rs ill possession to pay a landlord's claim to be paid pre- 1^:^",\'" ferentially for overdue rent, after service of notice under s. 12 of 45 Vict. c. 25 (Doiii.) is l)y ss. 20 .iiid 21 of that Act (ss. 22 & 23 of this Act) void, unless the permission of the Court is first obtaiiuMl: Fuches v. Hamilton Tribune (1884), 10 P. R. 400. After a winding-u}) oi'der tlic ))i<)i>('rty ol" tlic com- pany cannot be sold for taxes: School Cornmissioners of Ilochrhif/a V. M. 143. 748 DOMINION WINDING-UP ACT. Sect. 23. Bui a return by ilii' sheriff after the winding-up that tlie writ is unsatisfied is not prohibited : Pukulski V. Jardine (1912), 5 D. L. R. 242; 26 0. L. R. 323. Garnishee. Ill the case of an execution by a writ of fi. fa., the important date is that on which the sheriff seizes; in the case of an attaclniient of a debt by means of a gar- nishee order the date to be considered is the date on which the order nisi is served; in other respects the rule applicable to the stay of these two forms of pro- ceeding is the same : Re Stanliope Silkstone Collieries Co. (1879),llCli. D. 160. But see s. 84, which negatives the lien unless the moneys have been paid over before the winding-up has commenced: Lavell v. Canadian Mineral Rubber Co. (1913),14D. L. R. 521. A garnishee summons issued after a winding-up order is ineffective to attach moneys owing to the com- pany and will be set aside : Lavell v. Canadian Mineral Rubber Co. (1913), 14 D. L. R. 521. Rent. As regards distresses, the sections under considera- tion only apply to a landlord who seeks to distrain upon goods of a company, which is his legal tenant. Therefore in New City Constitutional Club Co. (1887), 34 Ch. D. 646, the Court decided that it could not pre- vent a landlord from distraining upon goods whicli, although originally the property of the company, had ceased to be so by being charged for more than their full value in favor of debenture holders. Again when the landlord has no right of proof against the company, the Court will not restrain the landlord from levying a distress on the company's goods: In re Lundy Granite Co., Ex p. Heaven (1871), L. R. 6 Ch. 462; Re Carriage Co-operative Supply Association (1883), 23 Ch. D. 154; In re Exhall Coal Mining Co. (1864), 4 De G. J. & S. 377; Re Regent United Service Stores (1878),8Ch. D..616. Rent iifciu- If the rcut accrued due before the commencement wfndingnii. ^^^ ^^^^ wiiidiug-up, the landlord will not be allowed to distrain: Re Traders North Staffordshire Carrying Co. (1874), L. R. 19 Eq. 60; Thomas v. Patent Lioniie Co. (1881), 17 Ch. D. 250. Even though the liquidator EXECUTION, ETC., AGAINST COMPANY VOID. 749 may have retained j)ossessioii of and carried on the Sect. 23. company's works upon the land: hi re North York- shire Iron Co. (1878), 7 Ch. D. 661; Re Brown, Bayley S Dixon (1881), 18 Ch. D. 649. The landlord must prove for his debt like any other creditor: In re South Kensington Co-operative Stores (1881), 17 Ch. D. 161; Re Oak Pits Colliery Co. (1882), 21 Ch. D. 322; Fiiches V Ilcnnilton Tribune Co. (1884), 10 P. R. 409. A distress made before the making of a mnding-up order is not avoided thereby : Re E. C. Colwell Candy Co, (1899-02), 35 N. B. R. 6i3; and see s. 84 and notes. There is nothing in ss. 22, 23 and 84 to prevent a land- lord from realizing where the distress has been put into effect' before the commencement of the winding- up: Re Shirleijs, Ltd. (1916), 29 D. L. R. 273. If the company by its liquidator remains in possession for the purpose of the realization of its property to better advantage, it can only do so on the terms of the lease. The lessor is entitled to receive out of the assets got in by the liquidator the sum required to put the premises in the repair required hj the covenants and not merely to prove for his claim: In re Levi S Co., Ltd. (1919), 88 L. J. Ch. 233. If the rent accrued since the commencement of the itont ac-oru- winding-up, the landloi'd will l)e allowed to distrain for ^.[p!^,^""^' it oi- receive payment in full, if the liquidator has re- tained possession of the property for the i)urposes of tile winding-up, or for carrying on the company's busi- ness, or in order to sell it, or to do the best he can witli it; for under these circumstances the rent is considered as OIK! of the ex])enses of the winding-up and should be jjaid in full like any other debt properly incurred bv the liquidator: Re Lundy Granite Co. (1871), L. R. s'Ch. 462; Re North Yorkshire Iron Co. (1878), 7 Ch. 1). 661 ; Re Silkstone dc Dodworth Iron Co. (1881), 17 Ch. D. 158; Re South Kensington Co-operative Stores (1881), 17 Ch. 1). 161; Re, Brown, Bayley (£■ Dixon (1881 ), 18 Ch. D. 649; Re Oak Fits Colliery Go. (1882), 21 Ch. 1). 322. If the rent has accrued due partly bcfoi-e and partly after the conimencenient of llie wiiidiiig-uj), if the l;ni distfaiii. or be ii.iid in lull. 750 DOMINION WINDING-UP ACT. Sect. 23. t'or tlie latter portion of the rent, the rent will be ap- portioned, and the distress will be allowed for so much as accrued after the winding-up commenced : Ee South Kensington Co-operative Stores (1881), 17 Ch. D. IGl. Appointment of Liquidators. Liquidator 24. The coiu'l ill making the winding-up order, anay appoint to be ;) litjuidator or more than one liquidator of the estate and appointed, ^.ly^.pts of the company. R. S., c. 129, s. 20. Aotinsr ^^- ^^ ^^*^^"® ^^^^^ °"® liquidator is appointed, the court may liquidator tleelare whether any act to be done by a liquidator is to be done by all or any one or more of the liquidators. R. S., c. 129, s. 23. Additional 26. The court may, if it thinks fit, after the appointment liquidators, of one or more liquidators, appoint an additional liquidator or liquidators. R. S., c. 129, s. 22. Notice pre- 27. No liquidator aforesaid shall be appointed unless a vious to previous notice is given to the creditors, contributories and appointment. g|^^j.gi^Q]f^gj.g oj. members ; and the court shall by order direct the manner and form in which such notice shall be given and the length of such notice. R. S., c. 129, s. 20. Compare Imperial Companies Act, 1862, ss. 92 and 149. Appointment of Liquidator. Appointment Under the former Act, 45 Vict., (Dom.) c. 23, the of liquidator, li^^i^j^tor must be appointed by the winding-up order. In this present section the word used is ''may." The practice now is on the first order to appoint a provi- sional liquidator as provided in s. 29, and then appoint the permanent liquidator after notice as prescribed by s. 27 : Shoolbred v. Union Fire (3887), 14 S. C. R. 624; Re Union Fire (1886), 13 A. R. 268 and (1885), 10 0. R. 489; Great West Supply Co. v. Installations, Ltd. (1914), 15 D. L. R. 896. The winding-up order in the usual form delegates to the Master-in-Ordinary or Official Referee the powers of the Court, as may be done under s. 110 of the Act, the practice in this respect differing from that in England where the Judge must exercise his own dis- cretion in the appointment of the liquidator. APPOINTMENT OF LIQUIDATOES. 751 See Re Giielph Linseed Oil Co, (1903), 2 0. W. R. Sees. 24-27. 1151; Cie Villeneuve v. Price Bros., Ltd. (1909), Q. R. 36 S. C. 396. Tlie Master-in-Ordiiiary or Official Referee then directs a notice to be sent out for the appointment of a permanent liquidator. Previous notice of the appointment of the perman- Notice, ent liquidator must be given to the creditors, contribu- tories and shareholders or members in compliance with s. 27 ; otherwise the appointment will be set aside : Shoolbred v. Union Fire (1887), 14 S. C. R. 624; Re Guelvh Linseed Oil Co. (1903), 2 0. W. R. 115, Great West Supply Co. v. Installations, Ltd. (1914), 15 D. L. R. 896; Stimson v. Northwest Cattle Co. (1902-3), 5Que. P.R.I 81. As to the nature of the notice, see Cie Villeneuve v. Pwe Bros., Ltd. (1909), Q. R. 36 S. C. 396. Upon a contest for the appointment of liquidators who wui be in a "winding-up proceeding it is desirable to follow the »PPoi°^ed. rules for guidance to be found in the English cases under the Companies Acts. The Court abstains from laying down any such rule as that the nominee of the petitioning creditors should have a preference. The Court will consider the condition of affairs to ascer- tain what parties are most interested in the due admin- istration of the estate in liquidation, and, other things being equal, will act upon their recommenda- tion: 7?^> Alpha on Co. (1887), 12 P. R. 298. When the creditors were those whose interests were most to be regarded and the great bulk of them favoured the appointment of L. and opi)osed the nominee of the petitioning creditors, and Ij., who resided in the county where the company's operations were carried on, and where all its books and assets were, was already de facto liquidator under voluntary proceedings taken pursuant to the Ontario Act and was otherwise well qualified for the position, the Court appointed him liquidator. One set of costs allowed out of estate to successful creditors following Re Northern Assam Tea Co. (1870), T.. R. 5 Ch. 644; Re Alpha Oil Co. (1887), 12 P. P. 29K. 752 DOMINION WINDING-UP ACT. Sees. 24-27. Cuicr'Ls paribus, the petitioner's nominee is pre- , . I'erred: i?c' General Provident Ins. Co. (1868), 17 W. R. A|i]i(>int- . \ / 7 i.H-ntof 42; Be Albert Average Association (1870), 5 L. E. Cli. litiuidator. .^QT No bard and fast rule to this effect exists — wishes of those most interested are regarded: Re Northern Assam, Tea Company (1870), L. R. 5 Ch. 644; Re Hoy- land and Silkstone Colliery Co. (3 884), W. N. 13; Re Association of Land Financiers (1878), 10 Ch. D. 269. The Court has a discretion and is not merely to register the result of the determination of the creditors and contributories and it may refuse to accept their nominee: Re International Contract Co. (1866), L. R. 1 Ch. 523 ; Re London S Bombay & M. Bank, L. R. 1 Ch. 525; Re Northern Assam Tea Co. (1870), L. R. 5 Ch. 644. See also In re Radford S Bright, [1901] 1 Ch. 272. Compare also: Re Johannesburg Gold Trust Co., [1892] 1 Ch. 583; Re Land Development Association (1892), W. N. 23; Re Commercial Bank of Manitoba (1893), 9 Man. R. 342. Appeal While an appeal may be taken against the appoint- ment {Markle v. Ross (1889), 13 P. R. 135), the Court of Appeal will not interfere with the discretion of the Judge in the appointment of a liquidator : Re Interna- tional Contract Co. (1866), L. R. 1 Ch. 523; Re Rail- way Finance Co. (1866), 14 W. R. 956; Re Albert Average Assoc. (1870), L. R. 5 Ch. 597, and see Forsythe v. The Bank of Nova Scotia (1890-1), 18 S. C. R. 707, affirming (1889-90) 22 N. S. R. 97. Liquidators should be disinterested persons, and neither creditors nor shareholders should bo ap- pointed: Re Central Bank of Canada (1887), 15 0. R. 309; Re Men's Wear, Ltd. (1915), 22 D. L. R. 530. The appointment of a shareholder is not favored: Re Northumberland and Durham Banking Co. (1858), 2 D. & J. 508. If, however, all the creditors desire the appoint- ment of an individual who happens to be a share- holder, he may be appointed : Re New Westminster Gas Co. (1895-7), 5 B. C. R. 618. APPOINTMENT OF LIQUIDATORS. 753 Where the creditors have the chief and immediate Sees. 24-27. concern in realizing the assets, their nominees will be appointed as against the nominees of the shareholders : Re Central Bank of Canada (1887), 15 0. R. 309. It is not necessary for both creditors and shareholders to be represented, and a bank may be appointed liquida- tor: Forsythe v. Bank of Nova Scotia (1890-1), 18 S. C. R. 707. One of the proposed liquidators was formerly an official of the bank and was largely indebted to it, though it was claimed that his indebtedness was fully secured; his principal support also was from those connected with the former management of the bank. Held, that the objections to his appointment were most serious: Re Commercial Bank of Manitoba (1893), 9 Man. R. 342. In appointing liquidators to a bank the Court is Liquidators confined to those nominated at the meeting of creditors toiibank and shareholders, but is not bound by the result of the voting and ouglit to exercise its own discretion in the selection of liquidators : Re Commercial Bank of Mani- toba, supra. It is not usual to appoint more than one liquidator : Re Difjnard (1910), 11 Q. P. R. 389. Where a volun- tary winding up is superseded by a compulsory order the voluntary liquidator is usually continued : Re Lon- don d Mediterranean Banking Co. (1866), 15 W. R. 33. A similar practice obtains in the case of a receivership: Cf. Shoolhred v. Clark (1890), 17 S. C. R. 265, or assiirnment. ')=)' 28. The couit sliall also determine what security shall ho Security, given by a liquidator on his appointment. E. S., c. 120, s. 24. Compare Imperial Companies Act, 1862, s. 92; also Imperial Companies (Winding-up) Act, 1890, a. 4, s-s. 3, and English Rule 67. No special rules, instructions or forms regarding security have been adopted in Ontario. The security most usually given is the bond o\' a guarantee companj^ but other security has frequently been accepted. n.r.A. — 48 Provisional liquidator. 754 DOIMTXTOX WINDING-UP ACT. Sect. 28. When the rKurulatioii has been partially completed s,pp„j.j^y the security is sometimes reduced. The security need not be fixed by the winding-up order; it mav be left to the Master under s. 110: Shoolbred v. Clark (1890), 17 S. C. li. 265. As to certificate of liquidator's liability on default, see Re Biiinhuiham Breiving Co. (1883), 52 L. J. Ch. 358. The sureties have a right to appeal against the Master's certificate where the bond provides that the same shall be sufficient evidence of the amount of the liquidator's liabilitv: Re Army S Navy Clothing Co. (1902),3O. L. R. 37. 29. The couii may on the presentation of the petition for a winding-up order or at any time thereafter and before the first appointment of a liquidator appoint provisionally a liqui- dator of the estate and effects of the company and may limit and restrict his powers bv the order appointing him. K. S., c. 129 s. 26 ; 52 V., 32, s. ^12. Compare Imperial Companies Act, 1862, s. 92. See the notes under ss. 24 ff. at p. 750. Incorporated 30. An incorporated company may be appointed liquidator fompany ^q f]^Q goods and effects of a company under this Act; and if apifointed. an incorporated company is so appointed, it may act through one or more of its principal oflficers designated by the court. R. S., c. 129, s. 21. 2. Where under the laws of any province a trust company is accepted by the courts of such province, and is permitted to act, as administrator, assignee or curator without giving security, such trust company may be appointed liquidator oE a company under this Act, without giving security. 6-7 Ed. VII. (1917), c. 51. See Forsythe v. Bank of Nova Scotia (1890-1 ), 18 S. C. R. 707. See Clarke and Union Fire Ins. Co. (1885), 10 0. R. 489; Forsythe v. Bank of Nova Scotia (1889-90), 18 S. C. R. 707. Powers of 31. Upon tlie appointment of the liquidator all the powers of ^'irectorsto the directors shall cease, except in so far as the court or the liquidator sanctions the continuance of such powers. R. S., c. 129, s. 34. Compare Imperial Companies Act, 1862, s. 133, s-s. 5. cease. APPOINTMENT OF LIQUIDATORS. ( 00 Property of the Mabow Coal and Gypsum Company Sect. 31. in liquidation was sold at public auction and knocked down to McK., who has been a director of the com- pany and who was appointed and acted as secretary- treasurer until the winding-up was made. On motion of the liquidator to confirm the sale, Held, that when the company was put into liquidation the management and control of the property by the director ceased, and consequently that the sale was good: Re Mabotv Coal and Gypsum Co. (1894), 27 N. S. 305; Chatham National Bank v. McKeen (1895), 2-t S. C. li. 348. The company defendant, before the appointment of a liquidator, was summoned to answer interrogatories upon articulated facts, but a liquidator was appointed before the day fixed for answering. The rule was con- tinued by consent to a subsequent day, and on that day no one appearing to answer, default was entered. Held, inasnuich as by s. 34 (now s. 31) of the Winding- up Act, upon the appointment of a liquidator all the powers of the directors cease, except in so far as the Court or the liquidator sanction their continuance, the directors after the appointment of a liquidator could not authorize any person to answer for them uidess their powers had been specially continued to that effect. The company was, therefore, relieved from the default and the liquidator allowed to answer: GraJiam v. Cassplman Lumhcr Co. and Ldniionth (1893), 4 R.J. Q. (S. C.) 91. See also notes under s. 20. 32. .\ !i(nii(l;itor may resign or may bo romoved t>y tlu' KcsimiMiion coml, oil line cause shown, and every vacancy in the oHice <»!" "",',I„^,„, li(|uidalor sliall l)e filled l.y tlio r t. I.'. S., c. 120, .s. 27. ('\)iiipa)-(' hiipei'ial Comiiaiiies Act, 1802, ss. 93, 141 ; Coiiiiinnics (Consolidation) Act, 19()S. ss. 149 (G), 186 (viii). Iiitciitioii to leave the couiitiN is a (hie cause for resignation, see lie Woodhnrn Sons Co., Ltd. (1910), Que. 11 P. R. 393. Wiiere there is want of liarmony between tlie TKiiii- dators the Coui1 will remove one of tlirm (hi tlic advice 75(3 DOMINTOX WTNDTNO-TM' ACT. Sect. 32. of the civditors : Cloyes v. Darling (1884), IG R. L. ,T— ;;^— G49; Exchmige Bank v. Campbell (1885), 15 R. L. 373. =""' '■;- , See also Re Banqiie d'Ecliange and Darling (1884), moval of -,^-rjT nACi li(iui(iiitor. lb K. L. b4y. An application to remove a liquidator and appoint others was granted upon the gi-ounds : — (1) That the majority of creditors requested the change. (2) That the proposed liquidators would act without remunera- tion. (3) That the business connection of one of the proposed liquidators would be of value to the company : Re Assiniboine Valley Stock and Dairy Farming Co. (1889),6M. R. 105. See Sir John Moore Gold Mining Co. (1879), 12 Ch. D. 328-331; Ex p. Newitt (1884), 14 Q. B. D. 177; Re Adam Eyton, Limited, 36 Ch. D. 299 ; Re City and County Investment Co. (1877), 25 W. R. 342; Re Mar- seilles Extension Co. (1867), L. R. 4 Eq. 692; Re Brit- ish Nation Assurance Co. (1872), L. R. 14 Eq. 492; Re Hatzic Prairie Co., Ltd. (1915), 15 D. L. R. 772 (where the liquidators wrongfully delegated their powers). The interests of the liquidation are alone con- sidered, no personal unfitness need be shewn : Re Adam Eyton, Limited (1887), 36 Ch. D. 299. The liquidator has a right of appeal against the removal, ibid. Removal may be directed if the liquidator has con- flicting interests : Re City and County Investment Co. (1877), 25 W. R. 342; or if he is guilty of misconduct: Re London Flour Co. (1868), 16 W. R. 553. The Court has refused to remove a liquidator on the sole ground that he was an employee of one of the mspectoYS : Rig aud Granite Co. v. Wylie (1916-7), Que. 18 P. R. 266. As to purchase by liquidator : see Re Madras Irri- gation Co. (1883), 23 Ch. D. 252. Refusal to employ as solicitor the nominee of credi- tors is not ground for removal : Re Plymouth Patent Sugar Co. (1870), W. N. 84. Personal unfitness includes favoritism to persons whose interests are opposed to those of others : Re Sir John Moore Gold Mining Co. (1879), 12 Ch. D. 325. RESIGNATION AND REMOVAL OF LIQUIDATOR. 757 If any vacancy occurs all the property of the com- Sect. 32. pany is deemed to be in the custody of the Court. Sec- tion 46. The application to remove should be made by motion to the officer of the Court to whom the reference to wind up has been directed, and supported by affi- davits establishing the grounds relied on. See also s. 140 (2) for removal by the Court for offence asrainst that section. •^to' Powers and Duties of Liquidators. 33. The hcjuidator, upon his appointment, shall take into Duties after his custody or under his control, all the property, effects and appoint- choses in action to which the company is or appears to 1)6 entitled, and he shall perform such duties in reference to wind- ing-up the husiness of the company as are imposed by the court or by this Act. R. S., c. 129, s. 30. The liquidator's first duty as regards the estate is to take charge of all the company's assets. He will then proceed to convert them into money, collect out- standing accounts and generally administer the affairs of the company with a view to realization and appl}^- ing the proceeds in payment of the company's credi- tors. A winding-up order supersedes an execution, and tlie liquidator will !)(> entitled to possession of the goods pending enquiry as to validity of claims asserted in respect of tliem: Re Ideal Foundry and Tfardivare Co. (1918),42 0. L. E. 411. Where the liquidator has previously been in ])os- session as assignee, on his appointment as liquidator the estate is in his hands as such : Re Army and Navy Co. (1902), 3 0. L. R. 37. While the title to tlie com- pany's estate is not by tlie Act vested in tiie licjuidator, it is his duty to protect any property in his custody for the benefit of the creditors. Tliis duty extends to any property of which he takes over possession from an assignee for creditors of the company: Nalional Trust v. Trusts and Guarantee (1912), 26 O. L. K. 279, 289. As to claim of liquidator on proceods of book debts assigned by a company and collected by it where 758 DOMINION WINDING-UP ACT. Sect. 33. the c'oiiii)aii\ is subsequently womul up, see Re Cope ,..„,.,,,, ,„„i' Fruit Co., Lid., and Bank of Montreal (1917), 32 D. L. •'"tirsof R. 34G; see also Re Kootenai/ Valley Co., Ltd. (1912), '"'"'' ''^'''" 3 D. L. R. 428. The Court will not divest the liquidator of an insolvent trust company of a trust coupled with an interest held by the company and which is an asset in the windin,i>'-up: Re Doniurion Trust Co. and Harper ■ (1915) 24 1). L. R. 670. In Re Colonial Investment Co. (1914), 15 D. L. R. 650, an application by the liquida- tor for delivery to him of the assets in the hands of the voluntary liquidator was ordered to stand over pending a reference to the Master to pass the accounts of the voluntary liquidator. On the appointment of the liquidator the powers of the directors cease, except as their continuance is sanctioned by the Court or the liquidator, s. 31. If the powers of the directors are not continued as provided by s. 31 their fiduciary relation to the company or its shareholders is at an end, and a sale to them by the liquidator of the company is valid: Chatham National Brick v. McKeen (1895), 24 8. C. R. 348. See the notes to s. 31. On the occurrence of a winding-up the business of the company ceases except so far as the liquidator deems necessary for the beneficial winding up of its affairs, s. 20; but as regards the carrying on of the company's business by the liquidator he can only do so subject to the provisions of s. 34, infra. As stated by Lord Davy in Kent v. Communaute (1903), A. C. 220, at p. 226, ''The office of the liquida- tor has in fact a double aspect, on the one hand he wields the powers of the company, and on the other hand he is the representative for some purposes of the creditors and contributories." He is an officer of the Court and like other officers may be ordered to refund money paid to him under mistake of law : In re Opera, Limited (1891), 2 Ch. 154. He is expressly made sub- ject to the jurisdiction which the Court may exercise under s. 123 in respect of misfeasance in office; the Court can compel performance of the licjuidjitor's duties by s. 132. POWERS AXU DUTIES OF LIQUIDATOR. 759 The High Court of Justice in Ontario in which pre- Sect. 33. ceedings were pending under the Dominion Act foj the winding up of the Central Bank granted an injunc- tion to restrain one Baxter from proceeding in the Courts of Quebec against the liquidators for things done in their official capacity : Re Central Bank, Baxter V. Central Bank (1890), 20 O. E. 214. To a limited extent the liquidator seems to be in the position of a trustee. But his true position is that of agent for the company; he is not, strictly speaking, a trustee for either the creditors or contributories ; therefore, in the absence of fraud, mala fides or per- sonal misconduct, an action for damages Avill not lie against him at the suit either of a creditor or contribu- tory for delay in paying the creditor's debts or in handing over to the contributory his proportion of the surplus assets: Knowles v. Scott, [1891] 1 Ch. 717. Where the liquidators of a colliery company sold the colliery to a new company, in which they took shares, it was held that they must be removed from their office : In re Devonshire Silkstone Coal Co. (1878), W. N. 71; see Healey's Joint Stock Companies (3rd ed.), j). G54. Where' the sale of an undertaking of a company by its licpiidator to himself had been set aside on the ground of fraud the liciuidator was ordered to repay the rents and profits which had accrued, but not the interest on the same : Silkstone, etc., Coal Co. v. Edcy. [1900 J 1 Ch. 167. Tlie following are some of the judicial expressions of opinion in the Knglish Courts and in oui- own Courts on the position of the liquidator as regards the extent to wliidi lie represents creditors as well as the com[)any : " In a winding-u]) tiie liciuidator acts not only for creditors but for contributories and for the comi)any also. The liquidator dofs not act nioi-c for the credi- tors tliMU lie does U)V tilt' conii)aiiy. ... I tliiiik a liquil<' on^ of the company, shall have Ibe same effect, with respecl to the •j'|'|^y,',",y'* liability of such company, as if such Itill <>r note bad been drawn, accepted, made or endorsed by or on liebalf of such ('oini>aiiy in the course of the cairving on of its business. 3. Xo deliverv of' the whole or of anv part of the assets «>f ^>';\;j;Ji;;«''y the company shall be necessary to give a lien to any jierson i„.(>dpd. 7(U DOMINION WINDING-UP ACT. Sect. 34. takiiiir security as aforesaid upon the assets of the company. IJ.S./c. r.M). s. 31 ; 63-63 V., c. 42, s. 3. i'o\v,MS0f The principlos by which the Court will be guided in giving- or williholding its sanction, are: (1) It will chock anything that might prejudice the estate; (2) it will not sanction anything that is improper or contrary to the ordinary course of trade; (3) it will exercise its discretion for the benefit of the general body of credi- tors: Re Commercial Bank Corporation of India and the East; Smith Floninq S Co.'s Case; Gledstane & Co.'s Case (1866), L. R. 1 Ch. 588. As to the effect of absence of previous notice to creditors see Williams v. Dominion Trust Co. (1916), 31 D. L. R. 786; Brigman V. McKenzie, 6 B. C. R. 56. See also Re London Fence {No. 1) (1911), 21 Man. R. 91. Sub-section (a). Suits (a). A company notwithstanding that it is in liquidation retains the power to sue, but this must be exercised by the liquidator with the authority of the Court: Kent V. Commnnaute (1903), A. C. 221. If an action is pro- ceeding to which the company is a party and the liqui- dator prosecutes or defends the action on behalf of the estate, the company must be regarded as the party liti- gant, and in the event of failure the costs will come out of the estate: Re Winborn S Co. (1905), 1 Ch. 413. The liquidator is not a necessary or proper party to an action against the company brought before the winding up to set aside as fraudulent a chattel mort- gage made to the company and continued against the company in liquidation : Cole v. British Canadian Fur Trading Co. (1918), 42 0. L. R. 587. When an action is brought by the liquidator of a company in liquidation in the name of the company and he is not otherwise a party to it, he cannot be ordered personally to pay the costs of it: Ontario Forge and Bolt Co. v. Comet Cycle Co. (1896), 17 P. R. 156. See Fraser v. Brescia Steam Tramways Co. (1887), 56 L. T. 771; and Re Cosmopolitan (1893), 15 P. R. 185, a case under the Ontario Winding-up Act. POWEKS OF LIQUIDATOR. 765 If the action is brought in his own name he is Sect. 34. personally liable for costs, notwithstanding that he obtained leave from the Court to sue : Jackson v. Can- non (1901-4), 10 B. C. R. 73. As to the discretion of the Court in awarding costs out of the estate, see Re Transcontinental Townsite (1915), 33 W. L. R. 241. A creditor of the company may intervene -in an action begun by the liquidator: Community of Sisters _ of Charity v. Bastien (1902), Q. E. 11 K. B. 64. As to the extent of this right of intervention see Kent v. Community (1901), Q. R. 19 S. C. 556. A creditor may also apply for leave to bring an action in the name of the liquidator: Re Bailey Cobalt (1915), 8 0. W. N. 433. Actions beg-un before the liquidation should be con- tinued in the name of the company — a fresh action should not be beg-un: Ross et at. v. Perras (1894), 5 R. J. Q. (S. C.) 470. The liquidator of a company in liquidation cannot begin proceedings against the debtors of that company without the previous consent of the Court on notice to creditors, contributories, shareholders or members as the Court prescribes, and it is not sufficient to seek that consent in the case of proceedings already begun against the debtors of the company: Ross et al. v. Perras (1894), 5 R. J. Q. (S. C.) 470. The liquidator of a company must be specially authorized to institute an action for the recovery of a claim due the company, and a general authorization to recover all the company's assets is not sufficient : Frey- r/any v. Davelny (1892), 2 R. J. Q. (S. C.) 505. The liquidator of an insolvent company ropresents the creditors of tliat company foi- actions which belong to the creditors themselves. Therefore the action to miUify a payment made by the conqiany to a creditor who knew the insolvent state of that comi)any, being of the iimIiiic nf nil action " ynuUenne," may be begun bv tiie liqui(hiloi- : Kent v. Blandy S Provost (1896), 19 Q. R. (S. C.) 255. As to reversal of direction to bring action on ap- peal, see He Auto Top, dc, Co., Ltd. (1916), 10 O. W. N. 76, 129. < t)(i DOMINION W lNl)lNi;-ri' ACT. Sect. 34. Section 34 (a) read with Section 20 is wide enough '^j(^ to justify a snnminry a])plication to the Court to pbice Sub-soc. (ii) ji contrilmtoi'v on the list instead of ai)i)lvino- for leave to bring- an action tor specitic perLonnance oi a con- tract to take shares, where the company before insol- vency is entitled to apply for rectification of the regis- ter: L?'^?/?'^afo/- of the Monarch Oil Co. v. Chapin (1917), 37 D. L. E: 772. In British Columbia the leave of the Court to con- tinue a joroceeding begun by the company may be granted to the liquidator on an ex parte application: Goldstein v. Vancouver Timber and Trading Co. (1912), 4 D. L. R. 172. Proceedings to enforce the liability of contributories are properly brought by the liquidator and not by the petitioner: Re Sarnia Oil Co. (1884),10P. R. 435. See also Comic Opera v. Desaidniers (1902-6), 7 Que. P. R. 83; Comet Motor v. Dominion Mutual (1910), 11 Que. P. R. 314; Standard Mutual v. Dominion Mutual, Sc, Co. (1910), 11 Que. P. R. 392; Buffer v. Battray (1911), Q. R. 39 S. C. 345; Lafferre v. Banque St. Jean (1911), 17 Rev. Leg. N. S. 428; Fecteu v. Ideal Confectionery, &g., Co. (1911), 12 Que. P. R. 360; Common v. McCaskill (1897), Q. R. 13 S. C. 282; Be E. Canada Pulp, Sc, Co. (1912-3), 14 Que. P. R. 351; Bank of Hamilton v. Kramer-Irwin (1912), 1 D. L. R. 475. Failure to In Samitt Agricidtural, &c., Co. v. Hutchinson i?ave° (1889), 17 0. R. 676, Proudfoot, J., held that an objec- tion, taken at the trial after evidence had been given, that the liquidator had not obtained the authorization of the Court, was too late. Semhle, that the proper course is to move in Chambers to dismiss the action for want of authority, ibid. In Hamilton v. Hamilton Steel and Iron, Sc, Co. (1911), 23 O. L. R. 270, 281, the judgment of Britton, J., at the trial indicates that an application to stay is the proper procedure, and none having been made the objection of want of approval was not given effect to. As to whether the liquidator should sue in his own name or in that of the company depends on the nature POWERS OF LIQUIDATOR. 767 of the cause of action and whether he therein repre- Sect. 34. sents the company or the creditors and contributories. whether There are . . . manv cases in which he may sue in his liquidator own name, as e.g., to impeach some act or deed oi the in own company before winding-up wliich is made voidable in^a^eof"' the interest of creditors and contributories. . . . company. Whenever the object of the action is to recover a debt, or to recover or protect property the title to which is in the company, the action should be brought in the name of the company: Kent v. Communaute (1903), A. C, per Lord Davey, at p. 226. If the liquidator has incorrectly brought the action in his o^vn name but the defendant has not objected to the form of the action but has admitted the debt and pleaded a set off, leave should be given to amend, ibid. Illustrations of the distinction are to be found in Hyde v. Thihaudeaii (1911), Q. R. 20 K. B. 200 (1910) 11 P. R. 419; Lapierre v. Banque St. Jean (1911), 17 R. L. N. S. 428. See also Royal Paper Box Co. v. Can- ada Cement, £c., Co. (1915), 48 Que. S. C. 287. In Crain v. Wade (1917), 37 D. L. R. 412, the liqui- dator sued in his own name, and this was regarded as unobjectionable as he was held to be suing as trustee for the company; see p. 417 of the report. Where a li(iuidator desires to reimburse himself out of the assets in respect of litigation here, the winding-up and the assets being in the control of the Court in Quebec where the order was made, the Quebec Court whicli has control of the assets alone can make the order: Dominion Cold Storage Co. (1897), 17 P. R. 468. As the li([uidator represents the company in litiga- Disco very tion he may Ix' coiupelled to make discovery. Tliere- jif,,,;,],,^,,,. fore, wliere an alh'ged contiii)utory took steps to he relieved from his liability, the lic^uidator was held to be bound by the same rules as to answering ((uestions and pioducing documents. as it' ;i l)ill luid been iiird against the conq)any and he had been made a defendant for the purpose <>f discovery. In Barned's Banking Co. Ex parte Contract- Corporation (1H67), L. R. 2 Ch. 350; lu re Contract Corporatio)/. fioocJi's Case (1^71 ). L. H. 7 Ch. 2()7. 768 D(nrTNION AVIN DING-UP ACT. Sect. 34, l.itiuidntor ciinyiusr on Inisiiioss of i-oinpauy. Salf of property. Sub-section (b). Unless the liquidators are authorized to carry on the business of the companj^, their duty is only to wind it u}), and they are bound to distribute the assets ac- cording to the liabilities as they exist at the date of the stoppage; they have no power to alter those liabilities by making a fresh contract: In re East of England Bankinq Co. (1868), L. R. 4 Ch. 14; In re Steel Co. of Canada (1885), W. N. 79. As to the effect of adopting an outstanding contract see Re Bishop Construction Co., Ltd. (1914), 15 D. L. R. 911. Authority to carry on the company's business does not authorize the liquidator of a trust company to part with the comjjany's right of retainer, which involving a reduction of the assets would require a substantive approval of the Court under s. 36: Williams v. Do- minion Trust Co. (1916), 31 D. L. R. 786. If the liquidator supplies goods in pursuance of a contract made before the winding-up commenced the purchaser cannot set off a debt incurred to himself by the company prior to the winding-up : In re Ince Hall Rolling Mills Co. v. Douglas Forge Co. (1882), 8 Q. B. D. 179; Mersey Steel and Iron Co. v. Naylor (1882), 9 Q. B. D. 648. See also In re Oriental Hotels Co., Perry V. Oriental Hotels Co. (1871), L. R. 12 Eq. 126; In re Regent's Canal Iron Works Co. (1875), 3 Ch. D. 411; In re Asphaltic Wood Pavement Co., Lee and Chap- man's Case (1885), 30 Ch. D. 216; Wiltshire Iron Co. V. Great Western Ry. Co. (1871), L. R. 6 Q. B. 101, 776 ; In re English Joint Stock Bank, Ex p. Harding (1867) L. R. 3 Eq. 341; In re Llaugennech Coal Co. (1887), 56 L. T. 475. Sub-section (c). The power to sell is conferred on the liquida- tor; it is not exercisable by the Court, but by the liquidator after first having obtained the Court's ap- proval. Consequently there must be a valid contract in existence between the liquidator and the purchaser before the liquidator can be compelled to carry out a POWERS OF LIQUIDATOE. 769 proposed sale: Re Canada Woollen Mills {Long's Ap- Sect. 34. peal) (1905), 9 0. L. R. 367. An agreement to pur- chase the assets of an insolvent company at a certain rate on the dollar of unascertained claims of the credi- tors is of doubtful validity: Re Bolt and Iron Co. (1885), 10 P. R. 434. Where the powers of the Court have been delegated to the Official Referee, and the lat- ter has approved of a sale there is no need to have the sale confirmed by a Judge in Chambers: Re McCann Knox Milling Co. (1909-10), 1 0. W. N. 579. As to the meaning of the phrase "free from encumbrances" in a sale by a liquidator, see Dominion Linen Mills v. Lang- leij (1911), 19 0. W. R. 648, affirmed (1912), 46 S. C. R. 633. Until forms, rules and regulations are made under s. 135 the ordinary Chancery practice in sales will apply. For the practice and what must be shown where a private sale is desired, see Re Bolt and Iron Co. (1885),10P. R. 434. A liquidator in England for the voluntary winding up there of a company incorporated under Imperial Act, 1862, cannot intervene in Quebec to prevent Cana- dian creditors realizing there on assets in the Province. Qiicere, if such liquidator has any standing before the Canadian Court: Powis v. Quebec Bank (1893), 2 Q. R. (Q. B.) 566; see also on this point British Canadian Lumbering and Timber Co. v. Grant (1887), 12 P. R. 301. Sub-section (g). The liquidator should aj)ply to the Court foi- |..,i^.i„jj leave to borrow before obtaining the loan. Where the funds. order authorizing tlie loan provided that tlie same should be a first mortgage on all the assets of the com- pany subject only to existing liens, charges and encum- brances, it was lield that the lender's lien took ])riority over the costs and charges of the winding-up proceed- ings, including the fees of the liquidator and solicitor: Keyes v. Ilanington (1913), 13 D. L. R. 139. Section 92 of the Act only gives priority to tlie winding-up costs over claims against the company in existence at the time of going into li({uidation, ibid. D.C.A.— 49 / 70 DOMINION \V1N1)ING-Ur ACT. Sect. 35. 35. Tho !i(|iii(l;it()i- \\\i\\\ with the ;i|i|ii'o\;il of llie court, ^, vrr aiipoint a solicitor or law aijont to assist liim in tlic performance \N hen solici- \.\- -, ,■ ^ ci -, on oo tor may bo ^^^ '^•'^ (lutios. Ii.l>., C. li^ liquidator, it conld formerly be frustrated by an oppos- ..ftU'bts. ing minority: Re Sun Lithographing Co. (1893), 2-* O.^R. 200. See the following English cases as to rights of dis- sentient minorities: In re Albert Life Assurance Co. (1871), L. li. G Ch. 381; New Zealand Banking Cor- poration, Ex p. Hanl-ey (1869), 21 L. T. 481 ; Re Smith, Knight S Co. (1868), 16 W. R. 1104. The liquidator of an insolvent company brought in for approval an agreement with certain parties for the sale to them of its assets, at a price equal to twenty- five cents on the dollar of the claims of the creditors of the company, ^ ' as may be admitted or adjudicated, ' ' in addition to the cost of the liquidation proceedings to be taxed by the taxing officer, and the remuneration of the liquidator to be settled by the Master. There was no mode of admitting or adjudicating on such claims provided in the agreement. The agreement was opposed by certain creditors, and thereupon the pro- posed purchasers withdrew from it. Held, (1) That if the creditors' claims were to be admitted by and be- tween the parties, the agreement was conditional, and the purchasers withdrawing before ascertainment left the agreement imperfect; (2) That by not providing a mode of admitting or adjudicating upon the creditors' claims, the agreement was ambiguous, and parol evi- dence would have to be adduced to explain it; (3) That for these reasons the agreement was incapable of being enforced, and could not be approved. QucBre, whether an agreement to purchase the assets of a com- pany at a certain rate on the dollar of the unascer- tained claims of the creditors of such company would be valid: Ee Bolt and Iron Co. (1885), 10 P. R. 434. In sanctioning a compromise the Court is exercis- ing a judicial discretion, and therefore will not give its sanction without having the means of itself forming an opinion of the propriety of the compromise proposed: Ex p. Totty (1860), 1 Dr. & Sm. 273; Morin & Bilodeau (1898),Q. R. 8Q. B. 330. COMPROMISE OF DEBTS. 773 If the necessary consents to a compromise have in Sect. 36. fact been given, the Court mil not be astute to find technical defects in the proceedings : Re Bynevor, etc., Collieries Co. (1879), 11 Ch. D. 605. Since the liquidator has no power to release any one (except under authority of the Court) \dthout the Court's approval, laches on his part will not release contributories : Re Ontario Rank (1912), 8 D. L. R. 243, per Garrow, J. A,, at p. 247. The Court may rescind a compromise made with its sanction, if obtained by misrepresentation: Ex p. Clarke (1866), 14 W. R.'856, and see Central Darjeel- ing Tea Co. (1866), W. N. 361; Ex p. Carstin (1862), 10 W. R. 457. The power of the Court to authorize the liquidator to act in the name of the company and to settle pend- ing proceedings is a discretionary power. The liqui- dator is not obliged to consult the creditors of the com- pany before applying to the Court for authority to effect a settlement: Morin y. Rilndeau (1898), Q. R. 8 Q. B. 330. The liquidator can not without the consent of the Court accept less than payment in full: Re Ontario Rank (1912), 8 D. L. R. 251; 27 0. L. R. 192; Williams v. Dominion Trust Co. (1916), 31 D. L. R. 786; Re Laurie Enrfine Co., 7 Que. P. R. 431. 37. The liquidator may, with the approval of the court, make Creditors .'^uch compromise or other\irrangemeiit with creditors or persons J^i*[„i'|e5!'"' claimin/? to he creditors of the company as he shall deem expedi- ent. R.S., c. 129, s. 61. Compare Imperial Companies Act, 1862, ss. 159 and 160. It was held in Re Sun Lithonraphing Co., 24 0. R. 200, that there was no power under this section to en- force a compromise upon a dissentient minority, or to comix'l a li(|uidator to accept a compromise. Tliis has been remedied l)y the amending Act, 62-63 Vict. (Dom.), c. 43, s. 3; now s. 64 of the Act: see Ward v. Mullin, Q. R. (1905), 14 K. B. 49. Inspectors. <<4 DOMINION WINDING-UP ACT. Sect. 38. 38. The loiirt may proNiilc, bv any ordci' sulisrc|iK'nl to tlie — winding-up ordor, lliat the liijuidator may exercise any of the i.r.lvi.io"rs^ to powers conferred u])on him by this Act^ without the sanction or iiowers of intervention of the court. 52 V., c. 32, s. 18. luiiiiilator. Vov an example of the api)lication of this section see In re Victoria-Montreal Fire Insurance Co. (1901-2), 4 Que. P. R. 315, where an order was made covering all cases in which the amount involved was under $100. The Court may under this section give the liquidator general authority to bring actions without application to the Court: Kendall v. Webster (1909-10), 15 B. C. K. 268. Appointment of Inspectors. 39. The court may appoint, at any time when found advis- able, one or more inspectors, whose duty it shall be to assist and advise the liquidator in the liquidation of the company. The dut}^ of the inspector is to assist and advise the liquidator in the liquidation; his remuneration is pro- vided for by s, 41. So long as he holds the office an inspector is disqualified from becoming a purchaser of the company's assets without the consent of his cestuis que trust, i.e., the contributories and creditors, or at least Avithout an order of the Court after notice to all concerned ; for lie is in the position of a trustee for sale of the assets of the insolvent company: In re Canada Woollen Mills {Long's Appeal) (1905), 9 0. L. R. 367, per Moss, C.J.O., at p. 368. See also Morrison v. Water (1892), 19 A. R. 622. In the event of an inspector becoming a purchaser w^hile the fiduciary relationship continues, the pur- chase may be set aside on the motion of the liquidator or a creditor : In re Canada Woollen Mills, supra, and (1904), 8 0. L. R. 581; Gastonquay v. Savoie (1898-99), 29 S. C. R. 613. Where the transaction is complete the creditors may be entitled to a reference to ascertain what profit, if any, the inspector has derived there- from: Segsworth v. Anderson (1894-5), 24 S. C. R. 699. tion. KEMUNEKATIOX OF LIQUIDATORS AND INSPECTORS. 775 Remuneration of Liquidators and Inspectors. Sees. 40-4^ 40. The liquidator shall be paid such salary or remuncra- j^gniunera- tion, by way of percentage or otherwise, as the court directs, upon tion. such notice' to the creditors, contributories, shareholders or mem- bers, as the court orders. 2. If there is more than one liquidator, the remuneration Distribu- sh"all be distributed amongst them in such proportions as the court directs. R.S., c. 139, s. 28. 41., The court shall determine the remuneration, if any is Remunera- deemed just, of the inspector or inspectors. 62-63 V., c. 42, s. 2. *j)°ectoJs?°' Remuneration. Compare hnpcrial Companies Act, 1862, s. 93. Liqnidator's The intention of s. 40 of the Winding-up Act is that [Tmu^"'^- the remuneration is not necessarily to be increased be- cause three liquidators are paid instead of one. The recompense for services is usually a percentage based on the time occupied, work done, and responsibility imposed, and when fixed goes to the liquidator, and, if more than one, is distributed amongst them: Re Th\'. Central Bank of Canada (1888), 15 0. R. 309; Be Wal- dron, Drouin Co. (1916), 17 Q. P. R. 358. The remuneration of the liquidators ought not to be fixed at the time of their appointment ; but the Court adopted the suggestions of the meetings as to the pro- portions in which the several liquidators should share in the amount to be allowed: Re Commercial Bank of Manitoba (1893), 9 M. R. 342. In fixing the compensation of the liquidator i1 is proper to take into account the amount adjusted or set off, but not actually received. A connnission of 21^ per cent, li.ixiiig been allowed on the amount col- lected, a further commission of li/^ per cent, on $231,000 adjusted or set off was allowed. Tiie compensation slioiihl be spread over the whole period of lifiuidation so as to insure vigilance at all stages: Re Central Bank, Lye's Claim (1892), 22 0. R. 247; see also He Central Bank (1890), 20 C. L. J. 24. The rHiuidatoi- should funiisli i.ro«»f of the services rendered, work done, etc. : Exchange Bank v. Camphell 776 DOMINION WINDING-UP ACT. Remunera- tion of liquid a tors and in- spectors. Sees. 40-41. (1885), 15 R. L. 373; Re Asslniboine Valley Go. (1889), () M. R. 184. The Court in Manitoba, in following the same prin- ciple as the English AVinding-iip Acts, reduced the scale adopted there allowing $5.00 a day for each day of eight hours, and $100 additional for preparing the report: Be Saskatchewan Coal Mining Co. (1890), 6 ]\I. R. 593. In Manitoba the Court has no power to refer to the Master the consideration of the amount to be allowed to the liquidator: Re Saskatcheivan Coal Mining Co., supra; but see 52 Vict. (Dom.), c. 32, s. 20, now s. 110. No charge can be made by liquidator for time spent in procuring his own appointment or opposing his dis- charge. Scale of remuneration and business for which it is allowed discussed: Re Asslniboine Valley Stock and Dairy Co. (1889), 6 M. R. 184. No fixed scale of remuneration has been adopted in Ontario. As to scale of remuneration in England, see Palmer, 11th ed.. Part XL, p. 331. As to priority of the liquidator's remuneration and disbursements in case of a deficiency of assets, see the following cases: — London Metallurgical Co., [1895] 1 Ch. 758; Re Massey (1870), L. R. 9 Eq. 367; Re Dron- field Silkstone Co. (1883), 23 Ch. D. 511; Re Dominion of Canada Plumbago Co. (1884), 27 Ch. D. 33; Batten V. Wedgewood Coal Co. (1885), 31 Ch. D. 346; In re Sanitary Burial Assn., [1900] 2 Ch. 289; Re Baden Machinery Co. (1906), 12 0. L. R. 634. The remuneration of the liquidator ranks after the rights of mortgagees and debenture-holders, but in priority to unsecured creditors: Re Regent's Canal (1875), 3 Ch. D. 411; Re Ormerod, Grierson & Co. (L890), W. N. 217. Under the prevailing practice, the liquidator is not allowed charges made for guarantee premiums on bonds of guarantee companies for fidelity of liquidator and proper distribution of the estate. But in Re Owen Sound Lumber Co. (1918), 14 O. W. N. 309, the cost of the bond was allowed as a dis- bvirsement by the Local Master. Priority of remunera- tion. KEMUXERATIOX OF LIQUIDATORS AND INSPECTORS. 777 As to the question of remuneration of liquidators Sees. 40-41. in the Central Bank Case, after a very full considera- tion of the case, the Master decided to allow two rates. (1) the lowest authorized by the Insolvent Act of 1875, viz., 11/4 per cent., and (2) the lowest rate sanctioned by the Court in Thompson v. Freeman (1868), 15 Gr. 384, namely 3 per cent. The higher rate allowed on all moneys collected after pressure; the lower rate on debts and interest paid at maturity: In re Central Bank, Lye's Claim (1892), 22 0. R. 247. A liquidator is not entitled to claim fees based on the tariff of the association of chartered accountants of which he is a member: Re Waldron, Drouin Co. (1916), 17 Que. P. R. 358. Creditors can have the liquidator's remuneration fixed by a Taxing Officer, see Re Laurie Engine Co. (1906), 8 Que. P. R. 59. In Farmers' Loan and Savings Co. (1904), 3 0. W. R. 837, the Court awarded a lump sum for the receipt and disbursement of the corpus and the care and management of the estate for a period of years. See also In re Williams (1902), 4 0. L. R. 501. The liquida- tor has no lien for his fees: Ross v. Walker (1908-9), 10 Que. P. R. 428. The liquidator's solicitor has no claim on the credi- tors for his fees: Beaiibien v. Corticelli Co. (1912-13), 14 Quo. P. R. 194. Depositing in Bank. 42. The liquidator shall depo.sit at interest in some chartered Monoy.? to bank or post office savings bank, or other Government savings l^*" (i<^posite"- J/'jJ^j!?,^,,"'' tories in their own right shall be distinguisbcd from por.'^nns 1'","^^ ']•"„. who are contributories as re)>r('senl;iwers have been delegated !•> a .hiiisdic- Local Master, such officii- has jiirisdiclioii in settling ^y!°,°,.. the list of {'oiilrihutorics to iii(|uirc wlictlicr sli.-iics, in respect oi" which certificates arc In-ld pin-porting to l><- fiiliv i)aiii : Ifr 'Cornwall Furniture Co. (i!>01») 18 ( ). L. U. IDl. In 782 DOMINION WINDING-UP ACT. Sees. 48-50. t';.e absenco of fraud, howovor, noithor the court nor the (U^ouatod officer will iiKiiiire into the adequacy of any consideration taken by the company in lieu of money payment for the shares : Ih' llcsti Mfg. Co. (1893-4) 23 S. C. K. G44, 653, as explained in Re Corn- wall Furniture Co., supra. Sfttiiug The liquidator and the court must proceed in the tHii'utoHos. manner provided by the Act. Thus it has been held that the liquidator cannot by petition pray to have the persons therein named declared contributories and be summoned to hear themselves so declared contribu- tories: Fra)/A- V. Boston Shoe (1915) 24 Que. K. B. 267. A holder of fully paid shares may be placed on the list of contributories on the application of the liquidator or on his own application: Re Monarch Bank (1914) 32 0. L. R. 207, per Maclaren, J.A., at p. 213 ; Re Colonial Assurance Co. (1916) 29 D. L. R. 488; 26 Man. R. 324. When an alleged contributory claims that some other person is liable in his stead he should bring such other person before the court: Re Eiiropean Arbitra- tion, Thomas Broum's Case, 17 Sol. J. 289; Re Euro- pean Arbitration, Read's Case, Reilly, 19 ; Re European Arbitration, MinshalVs Case, L. T. 29. But if he is entitled to have his name removed, the mere fact that there is no person who can be substi- tuted, will not prevent him from enforcing his right. When, for instance, as in Fyfe's Case (1869) L. R. 4 Ch. 768, the transferee was dead and had no legal representative, or as in Bentick's Case {European Arbitration) 18 Sol. J. 234, shares had been transferred to an infant and the transferee could not be found, the infant's name was struck off; and see Re Wilson (1873) L. R. 8 Eq. 240; and Curtis' Case (1868) L. R. 6 Eq. 455; and see Re Central Bank and Hogg (1890) 19 (). R. 7. Costs of Contributories. Costs of con- If a contributory successfully resists the applica- tories. tion to put him on the list he will be entitled to costs out of the estate. Nation's Case (1866) L. R. 3 Eq. 77; Ship's Case, 13 W. R. 450, 12 L. T. 728; Emmer- COXTRIBUTOEIES. 783 son's Case (1866) L. R. 2 Eq. 231, 1 Cli. 433; Coa^e's Sees. 48-50. Case (1874) L. R. 17 Eq. 169; Lowe's Case (1870) L. R. 9 Eq. 589 ; and even in some cases when the con- tributory is unsuccessful costs have been allowed. See Cleland's Case (1877) L. R. 14 Eq. 387, where decision turned on the construction of a new statute, and Part's Case (1870) L. R. 10 Eq. 622, which was a test case; see also Walker's Case (1866) L. R. 2 Eq. 554; Ex p. Jeaffreson (1871) 11 Eq. 109, and In re Mutual Society (1881) 18 Ch. D. 530. But except under special cir- cumstances when a contributory contests his liability and fails he must pay the costs: Gower's Case (1868) L. R. 6 Eq. 77; Re Birheck Life, Ex p. Barry (1865) 2 Dr. & Sm. 321, 13 W. R. 380; Musgrave d Hart's Case (1868) L. R. 5 Eq. 193; Andrew's Case (1868; L. R. 3 Ch. 161; Ea; p. Cakes d Peek (1867) L. R. 3 Eq. 576 at p. 633. In Hovenden's Case (1884) 10 P. R. 434, costs were awarded against the liquidator personally, and he was left to his recourse against the estate. And see Buck- ley, 7th ed., 308, et seq. A person whose name has been wrongly placed on the list of contributories does not, by delaying in mak- ing application to have it removed, thereby raise an equitv against his right to relief: Shewell's Case (1867) L. R. 2 Ch. 387; Fijfe's Case (1869) L. R. 4 Ch. 768; Hart's Case (1868) L. R. 6 Eq. 512-, Nelson's Case (1874) W. N. 196. The costs of an action for calls, which had been dis- continued by the liquidator on voluntary liquidation, were directed to be set off against any sum recovered by liquidator under originating sunnnons: bi re United Service Assn. \ 19011 1 Ch. 97. 51. Kvory sliarcholdcr or iiicinlicr of tho company or his re- i,i„i,iiity ..f presontativo, shall be liable to contril)ute the aiiiouut unpaid on •'*'"\''','[j|'||.''''"'* his shares of the capital, or on his liability to the company, or to r"p,.,,sl!„tn- its members or creditors, as the case may be, under the Act, tivcu. charter or instrument of incorporation of the company, or other- wise. 2. The aniouiil wliicb lie is liable to contribute shall be i^i„,,iiity „n deemed an asset of the company, and a debt due to the company, uss.m. payable as directed or appointed under this Act. U.S., c. 129, s. 44. 784 DOMINION WINDING-UP ACT. Sect. 51. The application of the section is limited to sliare- holders or nienibevs: Be Winnipc(j Hedge Wire Fence lila'f ' "^ Co. (1912) 1 D. L. R. 317. See also Wiarton Beet Boot '"''•''"'••^- Sugar Co., Freeman's Case (1906) 12 0. L. R. 149, 152 ; Be Monarch Bank (1914) 32 0. L. R. 207; Be Central Bank S York (1888) 15 0. R. 625. For cases of double liability on bank shares, see s. 52 and notes. A person who is merely a debtor to the company is not a contributory, although in a sense he may be liable to contribute to the assets, and when shares are held by A in trust for B the latter is not a contributory : King's Case (1871) L. R. 6 Ch. 196, but it is otherwise where he is also beneficially interested : Be Winnipeg Hedge and Wire Fence Co., supra. And an equitable mort- gagee of shares is not a contributory: SichelVs Case (1867) L. R. 3 Ch. 119. As to what constitutes a person a shareholder or member, see the notes to s. 46 of the Dominion Com- panies Act. It should be noted, however, that some of the de- fences open to a person where the company seeks to enforce his liability to it as a shareholder, are not avail- able where the liquidator is proceeding under the Act after a winding-up has occurred and the rights of credi- tors and other contributories have intervened: see Morris v. Union Bank (1899-01), 31 S. C. R. 594; Be Central Bank, Henderson's Case (1889) 17 0. R. 110; Be London Speaker (1889) 16 A. R. bO^; -Stephens v. Bidden (1910) 21 0. L. R. 484. An allottee of shares who has received notice of aHotment and delays to exercise his right of repudia- tion until after the winding-up of the company has intervened will be liable as a contributory : Barrett v. Bank of Vancouver (1917) 36 D. L. R. 158. Executors YoY the liability of executors and administrators of Ihlr^-^^^ a deceased shareholder and of beneficiaries holding holder. under unregistered transfer: see Clarkson v. McLean (1917-18) 42 0. L. R. 1. Share- Where a person before the incorporation of the member"'^ Company signs an agreement to take shares he does LIABILITY OF SHAREHOLDERS. 785 not thereby come within the section and is not liable Sect. 51. to be placed on the list of contributories : In re London Speaker (1889) 16 A. R. 508, explaining In re Queen Citij Refining Co. (1886) 10 0. R. 264, and see Tillson- hurg \. Goderich (1885) 8 0. R. 565; 7« re Rosedale (1889) 19 C. L. T. 311; Kelly's Case (1884) 7 0. R. 204; 12 A. R. 486; Thames Navigation Co. v. Beid (1886) 13 A. R. 303. But a subscriber before incorporation who incorpor- is named in the letters patent as a shareholder, or in ^^^or. some other way becomes a member of the company is liable : Re Haggart Bros. (1892) 19 A. R. 582. A signatory to the memorandum of agreement accompanying the petition for incorporation under the Ontario Act becomes a shareholder on incorporation mthout allotment: Be Nipissing Planing Mills (1909) 18 0. L. R. 80. Qu., whether the same is true under the Dominion Act unless he appears in the charter. Aider if the document signed is not the memorandum pro- vided for by the Act : Canadian Druggists v. Thompson (1910-11) 2 0. W. N. 1213; (1911) 24 0. L. R. 108. See also Lafieur v. St. Amour (1909) Q. R. 18 K. B. 400; i^e Dominion Milling Co. (1915) 8 0. W. N. 496. The mere fact that a person appears on the books of the company as a shareholder will not make him liable as such. It must be shewai that his name is there by authority: Cakes v. Turquand (1867) L. R. 2 H. L. 325; Chapman and Barker's Case (1866) L. R. 3 Eq. 3Ql',.Somerville's Case (1870) L. R. 6 Ch. 266; i?^' Scot- tish Petroleum Co. (1883) 23 Ch. D. 413. After incorporation, when a person signs a stock subscription book, containing an agreement to take stock, and requesting the shares to be allotted, he will not be liable to be placed on the list of contributories, if no allotment has been made : Be Zoological, etc., Soci- ety of Ontario (1889) 16 A. R. 543 ; or wiiere some otlier condition has not been fulfilled : Be Standard Fire Ins. Co. (1885) 7 (). R. 448; 12 A. R. 486; 12 S. C. R. 644. As to the necessity for allotment, see the notes to s. Allotment 46 of the Com])Mni<'s Act and summary of cases, infra, ''•'•'"■••'i- See also the following unreported decision of liir D.C.A. — .50 78() Sect. 51. Liability of sliaro- Ib.l.l.Tv, Fully i.iu.l shareholdei Defences. With- drawal of applicatioi DOMINION WINDING-UP ACT. Mastor-Jn-OrcUnary in Ontario: lie Queen City Refin- ing Co., lUli April', 1885. Consideration of cases bear- ing- on the snfliciency of agreement to take shares to render subscribers liable as contributories, where con- tract conditional. AVith regard to liability to the extent of the amount unpaid in respect of the contributory 's shares, the same questions arise as are discussed in the notes to s. 38 of the Companies Act, which see. See also cases noted below under 'Defences.' A fully paid shareholder may be placed on the list : Re Colonial Assurance Co., Ltd. (1916) 29 D. L. E. 488; Re Monarch Bank of Canada (1914) 32 0. L. E. 207. After the issue of the winding-up order a share- holder cannot avoid his liability as a contributory by setting up defects or illegalities in the organization of the company which can only be taken upon direct pro- ceedings by the Attorney-General: Common v. McAr- thur (1899) 29 S. C. E. 239. For liability of promoter before incorporation : see Sandusky Coal Co. v. Walker (1896) 27 0. E. 677. The grounds on which contributories have sought to evade liability may be classified under the following heads : — 1. Withdrawal of application before notice of allot- ment or notice never received. (a) And have been held not liable in the following cases: — Re London Speaker, etc., Co., Pearce's Case, supra; Re Zooloqical Society of Ontario, supra; Re Rosedale (1889) 19 C. L. T. 311; Magog v. Price S Magog v. Dohell (1887) 14 S. C. E. 644; Stevens v. London Steel Works, Delano's Case (1888) 15 0. E. 75; Hehh's Case (1868) L. E. 4 Eq. 9; Ritso's Case (1877) 4 Ch. D. 774; Natal Investment Co. (1869) 20 L. T. 962 (withdrawal oral); Truman's Case [1894] 3 Ch. 272; Northern Electric Co., Re (1890) 63 L. T. 369; Pellatt's Case (1867) L. E. 2 Ch. 527; Gunn's Case (1868) L. E. 3 Ch. 40; Land Shipping Co., Re (1868) 18 L. T. 786; Hutchinson's Case [1895] 1 Ch. 226; Ramsgate Hotel Co. V. Montefiore (1866) L. E. 1 Ex. 109; Baily's Case LIABILITY OF SHAEEHOLDERS. 787 (1868) L. R. 3 Ch. 592; Provincial Grocers {Calder- Sect. 51. wood's Case) (1905) 10 0. L. E. 705; Nasmith v. Man- ning (1886) 5 A. E. 126; 5 S. C. E. 417, was not a case of a contributory, but the defendants were held not to be shareholders as no notice of allotment was proved. (b) But have been held liable where contributory has v^oted or received a dividend or executed a transfer or otherwise acted as a member or subscribed before in- corporation and been named as a shareholder in Let- ters Patent, etc., and would now be held liable in the case of a company incorporated under the On- tario Act when they have signed the stock book before incorporation: Re Uaggart Bros. Mnfg. Co. (1892) 19 A. E. 582; Be CoUingwood, etc., Co., WeddeU's Case (1890) 20 O. E. 107; 7?e Bishop Engraving Co., Ex p. Howard (1887) 4 M. E. 429; Lake Superior Navigation Co. v. Morrison (1872) 22 C. P. 217; Kelly's Case (1884) 7 O. E. 204; 12 A. E. 486; ^rotr^'s Case (1873) L. E. 9 Ch. 102; Ex p. Lord Inchiquin [1891] 3 Ch. 28; Be Bread, etc.. Association (1893) 68 L. T. 434. See Hutchinson's Case [1895] 1 Ch. 226, supra; Isaac's Case [1892] 2 Ch. 158; i?e Hercijnia Copper Co. [1894] 2 Ch. 403. As to what is sufficient registration: Arnot's Case (1887) 36 Ch. D. 702; Ex p. Cammel [1894] 2 Ch. 392. And see also the follownng cases: — Adams' Case (1872) L. E. 13 Eq. 474; Addinell's Case (1865) L. E. 1 Eq. 225; Be Queen City, etc., Co. (1886) 10 0. E. 264 (but see London Speaker, etc., Co., supra); Ward's Case (1870), L. E. 10 Eq. 659; Langer's Case (1868) 37 L. J. Ch. 292; Levita's Case (1870) L. E. 5 Ch. 489; Bloxam's Case (1864) 33 Bcav. 529; Ex p. Boi/le (1885) 33 W. E. 450; Walker's Case (1868) L. E. 6 Eq. 30; Moutaqu's Case (1888), W. N. 137; Hastic's Case (1869) L. R. 4 Cb. 274; Challis' Case (1870) L. E. 6 Cli. 266; Crawley's Case (1869) L. E. 4 Cli. 322; Hindley's Case [1896] 2 Ch. 121 ; Alabaster's Case (1869) 7 Kcj. 273 ; Be Baihvaij Time Tables Co. (1889) 42 Ch. D. 104 ; Kent V. Ereehold Land Co. (1868) L. E. 3 Cli. 493; Whifehouse's Case (1867) L. E. 3 Eq. 790; Be (hneral By. Syndicate [1899] 1 Cb. 770; [1900] 1 Cli. .^65. not 788 DOMINION WINDING-UP ACT. Sect. 51. liable; Schoh'ij v. CvHtral By. Co. (1870) L. R. 9 Eq. , i,,,iHt7~" -^^; Taife's Case (18G7) L. R. 3 Eq. 795; Challis' Case of'shnre- (1871) L. R. 6 Cli. 26G ; Hare's Case (.1869) L. R. 4 Ch. 503 ; Oakes v. Turquand, supra; Re Scoitisli Petroleum Co. (1883) 23 Ch. D. 413; Ex p. Storey (1890) 62 L. T. 791; Baine's Case (1888) 16 O.R. 293; 16 A. R. 237; and Nasmith's Case (1891 ) 18 A. R. 209. Wliore notice of allotment posted before notice of Avitlidrawal given: Household Fire, etc., Co., v. Grant (1879) 4 Ex. D. 216. Yelland's Case (1852) 5 De G. & S. 395. Care should be taken in applying the English cases, as manv of them were decided on the construction of the Articles of Association. The general principle, however, laid down in Be BisJiop Engraving Co. (1889) 4 M. R. 429, is recognized in the above cases. Where rights of creditors have intervened: Be Miller's Dale, etc., Co. (1886) 31 Ch. D. 211; Tennent V. City of Glasgoiv Bank (1879) 4 App. Cas. 615. Winding-up had commenced: Be Thunder Hill Mining Co. (1895) 4 B. C. R. 62. See Be General By. Syndicate [1900] 1 Ch. 365. See notes to s. 46 of the Companies Act. Irregularis 2. On the ground that there has been illegality, ir- ment.° regularity or want of formality in the allotment or otherwise. (a) Have been held not liable: Stevens v. London Steel Works, Delano's Case (1887) 15 O.R. 75; Stace Y. Worth's Case (1869) L. R. 4 Ch. 682; Be Owen Sound Dry Dock (1891) 21 0. R. 349; Hoivard's Case (1866) L. R. 1 Ch. 561; Be Ontario Express Co. (1894) 21 A. R. 646, 24 S. C. R. 716; Harris's Case (1872) L. R. 7 Ch. 587; Be London S Southern, etc., Co., (1885) 31 Ch. D. 223; Be British Empire Co. (1888) 59 L. T. 291; Be Portuguese Mines (1889) 42 Ch. D. 160; Heritage's Case (1870) L. R. 9 Eq. 5; Cartmell's Case (1874) L. R. 9 Ch. 691; Bunn's Case (1860) 2 D. F. & J. 275; Pellatt's Case (1867) L. R. 2 Ch. b27;Seiveirs Case (1868) L. R. 3 Ch. 138; E^ Bolt Co. Hovenden's Case (1884) 10 P. R. 434; and see Cote V. Stadacona Ins. Co. (1881) 6 S. C. R. 193. LIABILITY OF SHAEEHOLDERS. 789 (b) But have been held liable: CampheWs Case Sect. 51. (1874) L. R. 9 Ch. 1, 43 L. J. Ch. 1 ; Re Cole, etc., Ins. Co. Close's Case (1885) 8 O. R. 92; Portuguese Copper Co. (1890) 45 Ch. D. 16; Staffordshire Gas Co. (1892) G6 L. T. 413; St raff Oil's Executors (1852) 1 DeG. M. 6 G. 576, and 4 DeG. M. & Sm. 256; In re Earned' s Co. (1887) L. R. 3 Ch. 105; Crawley's Case, uhi supra; Oakes v. Turquand, uhi supra; Railway Time Tables Case (1889) 42 Ch. D. 104; Re Miller's Dale Co. a886) 31 Ch. D. 211 ; FothergiU's Case (1873), L. R. 8 Ch. 270; Dent's Case (1873) L.R. 8 Ch. 768; Oorecjum Co. V. Roper, [1892] A.C. ^25; Ex p. Welton, [1895] 1 Ch. 255; Welton v. Saffery (1897) W. N. 42; Eddy- stone Co., [1893] 3 Ch. 9; Chapman's Case, [1895] 1 Ch. 771; Ames' Case (1896) W. X. 79; Dalton v. Dal- ton (1892), 66 L. T. 704. As to illeg-ality in allotment, see Stephenson v. VoK-es (1896) 27 O.R. 691; and see National v. Er/leson (1881) 29 Gr. 406; Re Central Banl; Raines' Case ■ (1889) 16 A. R. 257. 3. On the g-round that some conditions of the appli- Conditions ° ,. . . not com- cation not complied with or some new condition im- pUed with. posed. (a) Held not liable: Re Standard Fire Ins. Co., Turner's Case (1885) 7 0. R. 448; ^.2; /;. Roberts (1852) 1 Drew 204; Re Barber (1851) 15 Jur. 51; Re Stan- dard Fire, Barber's Case (1885-6) 12 A. R. 486; .1^/- dinell's Case (1866), L. R. 1 Eq. 225; Berk's Case (1874) L. R. 9 Ch. 392; Hoivard's Case (1866), L. R. 7 Ch. 561 ; ShacUeford's Case (1866) 1 Ch. 567; Pel- latt's Case (1867) L. R. 2 Ch. 527; Pentelow's Case (1869) I.. R. 4 Ch. 178; Bunn's Case, uhi supra; Mar- donald, Sons & Co., [1894] 1 Ch. 89; Re Rosedale, supra; and see Caston's Case (1884) 10 V. R. 339; Re Northern Assurance Co. (Black's Case) (1915) 25 0. T.. R. 703; 25 Man. R. 670. (b) Held liable: Re Standard Fire Ins. Co., Cas- ton's Case (1885) 7 0. R. 448, 12 A. R. 486, 12 S. C. R. 644; Elkinofon's Case (1867) L. R. 2 Ch. 511 ; Brid- ger's Case (1870) L. R. 5 Ch. 305; Rankin v. Hop S Malt Exchanye (1869) 20 L. T. 2^1; Jackson dc Shaw's 790 DOMINION WINDING-ITp ACT. Sect. 51. Cat- 62. Ill siuli ease regard shall, as lo creditors, he had to the oordinsr to ninonnt of the debt due to each creditor and as to shareholders daim. ^^i" niembers, to the number of votes conferred on each sliare- hokler or member by law or by the regulations of the company. Preliminary '^- 1'^^^ court may ])rescrihe the mode of pi'eliminary proof I'roof. of creditors' claims for the pur])ose of the meeting. Jl. S., c. 129, s. 19. Court may 63. Where any compromise or arrangement is proposed be- summon tween a company in course of being wound up under this Act con side'/ any ^'^^^ ^^^^ creditors of the company, or by and between any such proposed _ creditors or any class or classes of such creditors and the com- compromise. p^ny, the court, in addition to any other of its powers, may, on the application, in a summary way, of any creditor, or of the liquidator, order that a meeting of such creditors or class or classes of creditors shall be summoned in such manner as tlie court shall direct. .62-63 V., c. 43, s. 3. Sanction of 64. If a majority in number, representing three-fourths in compromise, value, of such creditors, or class or clas.ses of creditors, present either in person or by proxy at such meeting, agree to any ar- rangement or compromise, such arrangement or compromise may be sanctioned by an order of the court, and in such case shall be binding on all such creditors, or on such class or classes of credi- tors, as the case may be, and also on the li(juidator and contribu- tories of the company. 62-63 V., c. 43, s. 3. Chairman of 65. In directing meetings of creditors, contributories, share- meeting, holders or members of the company to be held as provided in this Act, the court may either appoint a person to act as chair- man of such meeting, or direct that a chairman be appointed by the persons entitled to be present at such meeting; and, in case the appointed chairman fails to attend the said meeting, the persons present at the meeting may elect a chairman qualified who shall perform the duties prescribed hv this Act. 52 V., c. 32, s. 13. Voting to be 66, No contributory, creditor, shareholder, or member shall in person y^^p j,^ r^^ix meeting unless present personally oi' represented by ^^' some person acting under a written authority, tiled with the chairman or liquidator, to act as .such representative at the meet- ing, or generally. E. S., c. 129, s. 55. Compare Imperial Companies Act, 1862', ss. 91 and 149. MEETINGS OF CREDITORS. 807 The Eng-lish rules prescribe certain formalities an ^ Sees. 61-66. requirements in holding the meeting and certifying ito determinations which are not embodied in our practice. Creditors who do not attend after notice are pre- sumed to be willing to be bound by the action of those who do attend: Exchange Bank v. CampbeU (1885) 15 K. L. 373. As to the action of the Court when there is a conflict as to appointment of liquidator, see Re Central Bank (1888) 15 0. R. 309; Re Alpha Oil Co. (1887) 12 P. R. 298 ; Re Bank of Liverpool (1889) 22 N. S. 97 ; Re Com- mercial Bank (1893) 9 M. R. 342; Cloyes v. Darling (1884) 16 R. L. 649. As to submitting proposals with reference to mat- ters arising in the winding-u]): Ex p. Slatter's Exe- cutors (1851) 5 DeG. & Sm. 34. If creditors pass resolutions which are not " bond fide " in the interests of the winding-up but are for some ulterior object the liquidator may get the leave of the Court to disregard the resolutions : Ex p. Cocks, Re Poole (1882) 21 Ch. D. 397. Compare Ex p. Straw- bridge (1883) 25 Ch. D. 266. See also as to the powers of dissentient minorities: Re Sun Lithographing Co. (1893) 24 0. R. 200. Prior to the passing of 62 & 63 Vict., c. 43, s. 3 (now ss. 63 and 64), the only power to compromise a debt due to tlie company was that given by s. 61 of R. S. C. c. 129 (now s. 37). The present section i)i-ovides that the Coui't may on application of the liquidator or any creditor of the coin])anv in a summarv wav order that a meeting of creditors shall be called to consider any pi-o- posed compromise, and if a majority representing three quarters in value of such creditors agree to any arrangement or compromise such arrangement or com- promise shall, if sanctioned, by an order of the Court, be binding on tlic creditors, the liquidators, and the contributories. As to the law before the enactment of tlie above statute, see Re Sun Lithographing Co., 24 O. R. 200. where it was held that a dissentient minority of ci-edi- tors could not be forced tr» f'oniy)romise. 808 Sees. 61-66. DOMINION WINDING-UP ACT. Sections 63 and 64 are in supplement of s. 37, and do not modify it: Ward v. Mullin (1905) Q. R. 14 K. B. 49. Production of Pass-books. r.Miik book 67. At every meeting of the contributories, creditors, share- of liquidator holders or members, tlie liquidator shall produce a bank pass- V* ^'V'lt*^ I'ook, showing the amount of the deposits made for tlie company, meeting. the dates at which such deposits were made, the amount with- drawn and dates of such withdrawal. R. S., c. 129, s. 37. And on order of court. What debts may be proved against company. Uncertain claims valued. Creditors* claims. 68. The liquidator shall also produce such pass-book when- 'ver ordered so to do by the court. R. S., c. 129, s. 38. Creditors' Claims. 69. When the business of a company is being wound up under this Act, all debts payable on a contingency, and all claims against the company, present or future, certain or contingent, and for liquidated or unliquidated damages, shall be admissible to proof against the company. 2. In case of any claim subject to any contingency or for un- liquidated damages or which for any other reason does not bear a certain value, the court shall determine the value of the same 56. :ud the amount for which it shall rank. R. S., c. 129, s. Compare Imperial Companies Act, 1862, s. 158; Bankruptcy Act, 1883, s. 35; Imperial Winding-up Pules, 1890, numbers 96-121; Insolvency Act (Dom.), 1875, s. 91. The definition of a '' creditor" contained in s. 2 (j) corresponds with the above section. See also s. 12 and notes under " Who may petition." It is the policy of the Act that all claims against the company are to be dealt with and disposed wdth in the winding-up proceedings ; see s. 22' and notes thereon. Unless there is a surplus of assets available after payment of the principal of the debts all interest ceases at the commencement of the winding-up: Warrant Finance Co., 4 Ch. 643 ; Re Collie, 1 7 Ch. D. 334 ; Hughes Claim, 13 Eq. 623 ; London, etc.. Hotel Co. [1892] 1 Ch. 639. For rules in cases of distribution of bank assets where there is such surplus, see Re Commercial Bank of Manitoba (1896) 10 Manitoba L. R. 61. But a secured CREDITORS CLAIMS. ' ^. ..,.. 809 creditor who realizes Ms security is entitled to apply Sect. 69. the proceeds in or toward payment of principal, inter- est and costs: London Windsor Co. [1892] 1 Ch. 639. A depositor whose deposit had been partially with- Depositors. drawn held hound to rank: Re Commercial Bank of Mauitoba (1896) 10 Man. L. R. 61. But where the relationship between the creditor and insolvent company is not that of customer and banker, but principal and agent, moneys collected by the agent for the principal will be impressed with a trust, if trace- able, in favor of the principal: Re I nte relational Mer- cantile Agency (1906) 7 0. W. R. 795. See also Re Kennedy, 36 U. C. E. 471 : Munro v. Commercial B. Soc, 36 U. C. R. 464. When a depositor had left a cheque with the president of a bank with instructions to draw the money out and invest it in a mortgage as soon as a suitable security could be found and the president the day be- fore the suspension drew the money out and put it in an envelope addressed to the depositor, it was held thatjhe depositor must rank only as an ordinary creditor : Re Commercial Bank of Manitoba (1896) 10 Man. 61. There is nothing in this section which alters or inter- feres with the lex loci contractus: In re Hart and On- tario Express and Transportation Co. (1893) 22 0. R. 510. Shareholders who had made a voluntary payment to the company's reserve fund were held not to be entitled to rank as creditors therefor : Re Atlas Loan Co. (1904) 7 0. L. R. 706. The Crown is entitled to a priority in a winding- Priority up over other creditors of equal degree, whether tlie'^^^'^^^ claim is asserted in right of the Dominion or one of the provinces: Reg. v. Bank of Nova Scotia (1884) 11 S. C. R. 1 ; Maritime Bank v. Receiver General (1892) A. C. 437; Commissioners of Taxation for N. S, W. v. Palmer (1907) A.C. 179; In re Sid. B. Smith Lumber Co., Ltd. (1917) 3 W. Wl R. 844, but not whore the priority is contrary to any local law: Exchange Bank of Canada v. The Queen (1886) 11 App. Cas. 157. In the case of i\r\ assignmont for the bonent of creditors under 810 DOMINION WINDING-UP ACT. Sect. 69. the Ontario Act difforent principles: are applicable: r,o.iit,.rs- Clarksou v. A. G. of Ontario (1888) 15 0. R. 632, (1889) rhiiiiis. ](3 ^ II 202, bnt see Commissioners of Taxation for N.S.W. V. rainier (1!H)7) A. C. 179, 185. In In re 'Sid. B. Smith Lumber Co., Ltd. (1917) 3 W. W. R. 844, following Commissioners of Taxation for N. S. W. V. Palmer (1907), A. C. 179, the claim of the Crown in the right of the Province of British Columbia was held entitled to priority as regards moneys due to the Accident Fund of the British Columbia Workmen's Compensation Board, which is ^' simply an adjunct or administrative body exercising its powers and acting for the Provincial Government on behalf of the prov- ince." See also White Star Hotel Co. v. Turgeon (1915-6) 17 Que. P. R. 299. Where the board is really a separate body and the company is not in truth a debtor of the Government there is no priority : Fox v. Neivfoimdland Government (1898) A. C. 667. The Crown's priority will not affect creditors hold- ing a specific securitv : Re Imperial Paper Mills, Diehl V. Carrift (1915) 7 0.' W. N. 630. Present, When the company has undertaken to indemnify a cei-tafn 0/ pcrson against certain contingent liabilities such person contingent. ^^^^ prove in respcct of the liability though he has paid nothing: In re Panther Lead Co. (1896) 1 Ch. 978; Hardy v. Fothergill, 13 App. Cases 351 ; British Provi- dent V. Anglo Australian Co., 10 L. T. 326 ; National Funds Co., 3 Ch. 791. Surety. So in the case of a surety : Ex p. Delmar, 38 W. R. 752. And a guarantor who has not paid anything under his guarantee has a right to prove in respect of his con- tingent liability: In re Blackpool Motor Car Co. (1901) 1 Ch. 77. In Re Stratford Fuel (1913) 28 0. L. R. 481, affirmed (1914-5) 50 S. C. R. 100, suh now. Broum V. Coiighlin, the position of guarantors on a bond limited in amount for the ultimate balance due by the company, which later became insolvent, to a bank was considered. The bond was in the common form permit- ting compounding with the company, the primary debtor, and taking and giving up securities without creditors' claims. 811 releasing the guarantors. In pursuance of the terms of Sect. 69. settlement of litigation between the bank and the liqni- dator in respect of this and other securities held by the bank, it was agreed inter alia that the bank was not to rank upon the estate ; that the bond in question should be declared valid ; that the bank reserved all its rights against all securities in its hands and against the guarantors. The claimants, the guarantors, sought to rank against the estate of the company in respect of the payments which they had made to the bank under the guarantee. The guarantors were held entitled to rank, for they had a right to prove which had not been taken away by the dealings between the bank and the primary debtor. It was further held that it is not double proof, but double ranking so as to compel the payment of two dividends for the same debt that is objectionable; that even if there coukl be no doul)le proof, the estate was not wound up, and as the creditor had been paid in full, the sureties could prove for the amount of the debt paid by them. See also as to double ranking, Ontario Bank v. Chaplin (1889-92) 20 S. C. H. 152. The winding-up order will not prevent a contingent liability of the company from ripening into a debt: In re Northern Counties of England Co., Macfarlane's Claim (1880) 17 Ch. D. 337. In this case the holder of a fire policy issued by the company was held entitled to prove for the full amount of a loss accruing after the winding-u]i. Secured creditors are specially dealt with under a sofumi group of sections, 76-82, infra. .roditors. The landlord can, of course, i)rove for past I'^'nt, j^^^^ but will invariably desire to take advantage ol' the special rights and remedies reserved by law or by the terms of the lease. The right of distress is discussed in the notes to ss. 22, 23 and 84, which see ; and the riglil to preferential payment in a winding-up uiidci- ss. 84 and 90, As to laiidloid |)i-()ving foi- f'lilurc fciit, if the land- lord accepts a surrender of the h-ase he may prove for the loss occasioned by such sni-reiidei- : /;/ /r /'(iiithcr Lead Co. I lH!Hi| 1 rh."97S; Ihinln v. /''nl In'ryill, Kl A.C. SI 'J DOMINION WINDIXG-UP ACT. Sect. 69. .■!")1 : ( 'r,ii,i's ( 'hum [IHOf) ] 1 Oh. 267. But this can only Ctvditors- ''*' tl<"'>' wlien tlio landlord accepts a surrender: In rt drtims. Xrn- Orit iitdl liuuk [181)5 | 1 Oh. 753. As to proving for future rent when there is an acceleration clause in the lease, seeShackelly. Charlton [1895] 1 Ch. 378. Before the case of Hardy v. Fothergill, supra, it had been held, In re Hnrsoys Claim, L. R. 5 Eq. 561 ; Hayter Granite Co., L. R. 1 Ch. 77, that a landlord could not prove in res])ect of damage sustained for loss of future rent, but in Craifi's Claim, supra, and In re Panther Lead Co., supra, it was said that Hardy v. Fothergill intro- duced a new rule in respect of this class of claims. See also ss. 23 and 84. Taxes and The right to prove for a claim for taxes depends on the right to maintain an action therefor, which only exists when the taxes can not be recovered in an} special manner provided for by the Assessment Act, e.g., distress or sale : hi re Ottaiva Porcelain and Car- bon Co. (1900) 31 0. R. 679. The principle is there stated by Street, J., at p. 690, as follows: ''Where there is no right of action, and therefore no priority between the person entitled to distrain and the company in liquidation, the person entitled to distrain may pur- sue his only remedy, viz., that of distress and reap the fruits of it as though there had been no liquidation. But where there is a right of action, even though there is a right of distress, then the creditor is within th'^ Winding-up Act and must prove as an ordinary creditor. " So it was held that there was right of proof for a water rate, where a corporate liability was im- posod. ihid. Taxes imposed before the winding-up can only ranlc as ordinary debts in the absence of a statutory lien or charge, but taxes imposed after the commencement of the winding-up must be paid in full as part of t^-e expenses of liquidation if the liquidator has remained in possession, and such possession has been a " benefi- cial occupation ": Re Ideal House Furnishers and Winnipeg (1909) 18 Man. R. 650. As to what consti- tutes such occupation by the liquidator as will create a liability to pay taxes, see In re National Arms and creditors' claims. 813 Ammunition Co. (1885) 28 Ch. D. 474 and the cases Sect. 69. there cited; see also the notes to s. 23. As to the right of a municipality to rank in respect of ** business tax" see Re Ideal House Furnishers (1909) 18 Man R. 650. The claim must be treated as an ordinary and not a preferential claim where the municipality being en- titled to distrain before the mnding-up order, has not done so: Re Faidkuers, Ltd., City of Ottaiva's Claim (1915) 34 0. L. R. 536. The following unreported decision of the Master-in- Ordinary in Ontario may also be referred to. Wliere parties in the position of trustees for a com- pany have purchased claims against the company at a discount they may rank for the face value of the claims, but are entitled to receive dividends OYvXy to the extent of their actual payments made to acquire the claims : Re Catholic Register, Ex p. Foy d Coffee, Master-in- Ordinary (Ont.), 10 Feb., 1900. And see Humher Iron Works Co., L. R. 8 Eq. 122 ; and Re Larking, 4 Ch. 566. 70. Clerks or other persons in, or having been in the employ- claims of nieiit of the company, in or (about its l)usiness or trade, shall be clerks and collocated in the dividend slieet by special priviletje over other p"j^^^|wg| creditors, for any arrears of salary or wages due and unpaid to them at the time of the making of the winding-up order, not exceeding the arrears which have accrued to them during the three months next previous to the date of such order. R. S., c. 129, s. ,^)f). The claims for arrears of salary and wages of the persons specified in the section enjoy a special privil- ege over other creditors, but as the Crown is not men- tioned in s. 70 the claim of tiie Crown to pi-iority is not affected. See s. 16 of the Interpretation Act. Where the claim comes into conflict with other privileged claims, e.g., of a lessor, the local law gov- erns: White Star Hotel v. Turqeon (1915-16) 17 Que. P. R. 299. Where l claim under the section comes into com- petition witn M security hehl by <'i b.nik under s. 88 of the Bank Act, see Re Alhrrta Ornamciilal Iron (\). rf- Jwprrial Bank (1917) .^5 W. L. R. 126. S14 DOMINION WINDING-UP ACT. Sect. 70. rriority of wajre- (^Icrks or otiier persons. Salary or wages. As to priority of wage-earners and material men, see Re Canadian Mineral Rubber Co. (lOH)) 10 0. W. N. 45G, (191()-7) 11 O. W. N. 1155; and as to the effeet of taking a promissory note for the amount of wages see Armstrong v. Watson (1919), 45 D. L. R. 501. As to the meaning of '' clerk " see Morlock £ Cline (1911 ) 23 O. L. R. 165, 166. A managing director is not a clerk: In re Newspaper Proprietary Syndicate (1^00) 2' Ch. 349; nor is a manager: White Star Hotel V. Turgeon (1915-16) 17 Que. P. R. 299. See also notes to s. 'Sb of the Companies Act. There are numerous cases in which the courts have had to decide who will be included under the terms " other persons." It has been held that the ejusdem generis rule applies: Re Ritchie-Hearn Co. (1905) 6 0. W. R. 474; Miquelon v. Vilandre (1914) 16 D. L. R. 316; Re Shirleys, Ltd. (1916) 29 D. L. R. 273; but in Morlock d Cline (1911) 23 0. L. R. 165, while the rule (lid not exclude a commercial traveller it was said that it is more sparingly applied than formerly. The person seeking the special privilege must not be in an independent position, e.g., an auditor or a solicitor who might do work for many companies : Re Ontario Forge S Bolt Co. (1896) 27 0. R. 230. On this principle a managing director has been held disentitled to any special privilege. 'Other persons' must be 'of the servant and not of the executive or master class ' : Re Ritchie-Hearn Co. (1905) 6 0. W. R. 474. A direc- tor is not a servant but a manager : Re Newspaper Pro- prietary Syndicate (1900) 2 Ch. 349. The element of control by the company is important : Re Western Coal Co., Ltd. (1913) 12 D. L. R. 401; Re Parkin Elevator Co., Ltd., Dunsmoor's Claim (1916) 37 0. L. R. 277. The words ' salary or wages ' import a contract for service as distinguished from a contract for services, and an independent contractor is not covered by the section, ibid., per Masten, J. Where, however, a director is employed as a commercial traveller and takes no active part in the management of the company lie has been held entitled to priority: Morlock S Cline (1911) 23 0.L. R. 165. PRIORITY OF WAGE-EARXERS. 815 An assignee of the privileged creditor may make Sect. 70. the claim: Lee v. Friedman (1909) 20 0. L. R. 49, Mor- lock (& Cline, supra. Where a servant is remunerated by a fixed sum 'Salary or and expenses, the latter are to be reckoned as part of '" ' the wages for which a privilege may be claimed : Re Morloch & Cline (1911) 23 0. L. R. 165. A bonus in addition to salary may come within the privilege : Allner v. Lighter (1913)' 13 D. L. R. 210. Where a per- son came within the class his claim was not disallowed because his remuneration was payable by way of com- mission: Re Hartwick Fur Co., Ltd., Murphy's Claim (1914) 17 D. L. R. 853. These cases have been criti- cized in the Ontario Court of Appeal in Re Parkin Elevator Co., Dunsmoor' s Claim (1916) 37 O. L. R. 277, Meredith, C.J.C.P, observing, at p. 283, that they reach if they do not overstep the limits of the law. In the last mentioned case Meredith, C.J.C.P., held that it was contrary to any reasonable meaning that could be attributed to the words 'salary or wages' to include the proportion of the price of the goods which the claimant was to have for the sales made by him. The judgment of Masten, J., went on the ground that the claimant was not one of the classes of persons entitled to priority, hokliiig tliat receipt of a commission in lieu of wages looks in the direction of an independent con- 'tractor but is not conclusive. Riddell and Lennox, JJ., concurred in the result but gave no reasons. The following have been held entitled to priority : — Examples. A commercial traveller: Morlock & Cline (1911) 23 0. L. R. 165; Rr Harticick Fur Co., Ltd., Murphy's Claim (1914) 17 I). I.. R. 853; Allner v. Lighter (1913) 13 D. L. R. 210. A salesman on salary under s. 10 of c. Ill of N. W. F.ntiticd T. Ordinances Alta. (1911), notwitlistandiiig that i,o ^" '"■''"•''•^• also acted as secretary; seynhle as secretary lie would have been i)rof('rn'd : Be S. E. Walker Co., Lid. (1913) 12 1). L. R. 7G9. A teamster using his own waggon and team, who is not an independent contractor, but is snbjoct to tlie direction and control of his employci-: lie ]Vesfer)i SIG DOMINION WINDING-UP ACT. Sect. 70. Coal Co., Lid. {VMW) VI 1>. 1^. 1^ -tOl, a case decided Priority of luidor till' abovc statute. wiiKo- rpjj I'ollowiuff have been held not entitled to prior- i';lllii>rs. '^ ity : — An accountant temporarily employed by the com- pany to audit the company's books and who is not sub- ject to any direction or control in so doing : Miquelon v. VilaHdre\l9U) 16 D. L. R. 316. Not ontitieLi An auditor, who is remunerated by ' audit fee ' : Re to priority. Qfitarlo Forgc S Bolt Co. (1896) 27 0. R. 230. A manager: Re SUrleys, Ltd. (1916) 29 D. L. R. 21^;airard v. Gariepy (1916) 49 Que. S. C. 284; White Star Hotel v. Turgeon (1915-16) 17 Que. P. R. 299. A managing director: Re Ritchie-Hearn Co. (1905) 6 0. W. R. 474; and under s. 10 of c. Ill of N. W. T. Ordinances, Alta. (1911), where it was impossible to apportion his salary so as to allow a certain portion of compensation for his services as salesman: Re S. E. Walker Co., Ltd. (1913) 12 D. L. R. 769. A mechanical expert and inspector: Re American Tire Co. (1903) 2 0. W. R. 29. La^ of 71. The law of set-off, as administered by tbe courts, whether set-off to of law or equity, shall apply to all claims upon the estate of apply- the company, and to all proceedings for the recovery of debts due or accruing due to the company at the commencement of the winding-up, in the same manner and to the same extent as if the business of the company was not being wound up under this Act. E. S., c. 129, s. 57. Compare Imperial Companies Act, 1862, s. 101; Insolvent Act (Dom.) 1875, s. 107. See also s. 100 of this Act. The law of set-off applicable in each case will be the law in force in the i^rovince where the proceedings are taken, e.g., in Ontario the provisions of the Judicature Act, R. S. 0. 1914, c. 56, s. 126. As to the nature of set-off, see Thompson v. Big Cities (1910) 21 0. L. R. 394, 402; Grills v. Farah ■ (1910) 21 O. L. R. 457; and for the distinction between counterclaim and set-off: Gates v. Seagram, (1909) 10 0. L. R. 216. Tlie distinction may be of importance under this section: see Grain v. Wade (1917) 37 D. L. R. 412, 417. LAW OF SET-OFF TO APPLY. 817 It is only 'mutual debts' which are properly the Sect. 71. subject of set-oi¥, as distingTiishecl from counterclaim, which fall within s. 71. In Crain v. Wade (1917) 37 D. L. R. 412, 55 S. C. R. 208 (affirming the judgment of the Ontario Court of Appeal (1916) 27 D. L. R. 179; (1915-6), 35 0. L. R. 402), it was held that a claim by the plaintiff on promis- sory notes or -on an account could not be set off against a claim, by the liquidator for the recovery of chattels and for damages for their wrongful seizure ; nor was the plaintiff entitled to set off against the claim of the liquidator the amount of debentures of the company transferred to the plaintiff as vendor to the company as part of the purchase price of the chattels. See also Ehede's Hotels and Restaurant Co. v. James (1887) 18 Q. B. D. 49. It is a fundamental principle of the law of set-off that the right shall be mutual and a misf eas- ant can not set off money due to him from the company against sums due for misfeasance: Ex parte Pelly (1882) 21 Ch. D. 492. If, however, a claim originally for damages has by judgment become a debt it can be set off: Moody v. Canadian Bank of Commerce (1891) 14 P. R. 258. The requirement that the debts must be mutual and between the same parties and in the same interest is also illustrated by Ince Hall Rolling Mills Co. v. Dou- glas Forge (1882) 8 Q. B. D. 179. The liquidator of a company in the course of being wound up sought to recover from the defendants the price of goods sup- plied to them by the company after, but in pursuance of a contract made before, the commencement of tlie winding-up, the contract not being a sale of specific goods. It was held that the defendants could not set off a debt from the company to them incurred wliile the company was carrying on business independently and for its own benefit. As to the significance of tlie words 'debts due or accruing due to the company at the commencement of the winding-up': see Crain v. Wade (1917) 37 D. L. R. 412. D.C.A. 52 SIS DOAllXJOX WINDIXG-UP ACT. Sect. 71. A claim cm a policy that has matured before the ^i.^,f{ ~ ~ \\'n\d'n\i^-u\) can be set off: Sovereign Life v. Dodd {\S'.)2) 2 g. B. 573. Where by set-off the debt on one side is satisfied the security for that debt is freed: Re Barnett (1874) 9 Ch. App.' 293. And see Clarke v. Uyiion (1884) 4 C. L. T. 249; Kindsgrove Steel Co. (1894) W. N. 25; Washington Diamond Co. (1893) 3 Ch. 95. See also Re Canadian Home Investment Co. (1917) 37 D. L. R. 598. As to set-off against an assignee of a director against whom the liquidator has subsequently to the assignment recovered damages for misfeasance : see In re Milan Tramways Co., Ex parte Theys (1882) 22 Ch. D. 122, 125, 126; Re Bailey Cobalt Mines, Ltd. (1919) 44 O. L. R. 1, where the cases are collected. Even where there is no set-off the rule that 'where an estate is being administered by the court, or where a fund is being distributed, a party cannot take any- thing out of the fund until he has made good what he owes to the fund' will prevent a director against whom the liquidator has recovered damages for misfeasance from obtaining pajTnent of his claim against the com- pany without paying in what he has been found liable to contribute: In re Rhodesia Gold fields, Ltd. (1910) 1 Ch. 239; Re Bailey Cobalt Mines, Ltd. (1919) 44 0. L. R. 1. Share- A shareholder who is also a creditor has no right to set-off a debt due by him to the company against his liability as a contributory: Re Wiarton Beet Root Sugar Co., Alexander McNeill's Case (1905) 10 0. L. R. 219 ; or against the double liability imposed on share- holders under the Bank Act : Maritime Bank v. Troop (1890) 16 S. C. R. 456. The reason in both cases is the absence of mutuality between the claims of the liqui- dator against the contributory and the claim of the latter as creditor of the company as a going concern. Moreover, as observed by Teetzel, J., in Wiarton Beet Root Sugar Co., supra, at p. 223, 'To allow a set-off by a shareholder who is also a creditor would violate the spirit and intention of the Winding-up Act, the ruling holders. LAW OF SET-OFF TO APPLY. 819 object of which is the distribution of the assets of an Sect. 71. insolvent company amongst its creditors pari passu.' See also GrisselVs Case (1865-6) 1 Ch. 528; Cali- sher's Case (1867-8) 5 Eq. 214; BarneWs Case (1874- 5) 19 Eq. 449; Black's Case (1872-3) 8 Ch. 254; Re Consolidated Investments, Ltd., Simons' Case (1918) 2 W. W. E. 581. The same rule applies to a claim for goods supplied to the company under agreement : Re Jones d Moore Electric Co. (1908-9) 18 Man. R. 549. In re Mimico, Pearson's Case (1895) 26 0. R. 289, is not a useful decision on the question of set-off: Re Wiarton Beet Root Sugar Co., supra, at p. 224. A creditor who is also a shareholder may set off his debt against calls made on his shares before the winding-up: Re Ontario Fire Insurance Co., Heigh- ington's Case, 10 W. W. R. 911. If the debt is incurred by the liquidator in the winding-up it may be set off: Ex p. Clark (1868-9) 7 Eq. 550, and see In re Pijle Works (1890) 44 Ch. D. 534, where the shareholder creditors had a charge on the calls. The question as to whether, in the case of a provin- cially incorporated company being wound up under the Dominion Act, the provincial legislature may confer a right of set-off on a shareholder wliich can not be cur- tailed by Dominion legislation, was raised but not decided in Re Wiarton Beet Root Sugar Co., supra. See Re Central Bank, Yorke's Case (1888), 15 0. R. 625. (1) Consideration of term contributory. It does not include a mere stranger wlio is a debtor to the company, but contemplates one liable to contribute in the character of a partner or member. (2) Can petitioner, an ordinary debtor, as against the note made by him held by the lic^uidator, set off deposit receipt inade by bank; note origiiuilly given for sum wiiicli deposit receipt rejiresonts. Two securities are different sides of same transaction. Held riglit of set off, citing West of Enqland Bank (1879) 27 W. R. UQ; Barrett's Case (1865) 13 W. R. 559. 8lI0 dominion wiNi)iN(;-ur act. Sect. 71. See also the following unreported decisions in On- s^t^^oi tario of the Master-in-Oidinaiy: Re Ontario Express Co., Dawson Bros.' Case, 3rd July, 1893. Damages allowed to be set off against calls made prior to winding-up order, but not as to any calls enforceable after that date when nuituality of debts ceased and the right of set off is governed by s. 71 of Winding-up Act. Re Canada Coal Co., Watson's Case, 17th Dec, 1895. Watson found liable as a contributory for $8,300.00, also under s. 123 of Act for moneys of the company received by him as managing director. He claimed to set-off against these liabilities his liability on a bond as surety for the company to the Delaware & Hudson Canal Co. Held, following Maritime Bank v. Trooi) (1888) 16 S. C. R. 456, that a contributory who was a creditor of a company could not set-off debt due to him by the company against calls made by the court in winding-up proceedings. Distinction drawn between calls made by directors and calls made by court in winding-up. In latter case debt not mutual. But surety does not become a creditor of principal debtor until he has actually paid the money, until then his liability is uncertain and contingent. Position as to set-off different under English Bank- ruptcy Act applicable to insolvent persons. Robson's Law of Bankruptcy, p. 368. But surety upon general principles of equity has a right to be indemnified; directs payment into court to a separate account suf- ficient amount of his debt to liquidator as will cover his liability to D. & H. Canal Co. under the bond, money to be 'earmarked' and available for D. & H. Canal Co. and will not be dealt with without notice to Watson. Time for 72. The court may fix a certain day or certain days on or sf-nfiiiig in within which creditors of the company may send in their claims, and may direct notice thereof to be given by the liquidator, and determine tlie manner in which notice of the day or days so fixed shall be given bv the liquidator to the creditors. K. S., c. 139, 6. 59. The Minister of Finance having a claim against an insolvent bank has no locus standi to api:)eal from order TIME FOR SEXDIXG IX CLAIMS. 821 of the Referee barring all claims not filed and proved Sect. 72. in response to advertisements : Re Ontario Bank (1916-7) 38 0. L. R. 242. If a claimant seeks to come in after the time allowed for filing claims he should show on affidavit the merit of his application and explain the cause of his delay: In re Merchant's Life Assn. of Toronto, Hoover's Claim (1902) 22 Occ. N. 21; cf. also s. 75. As to corroboration of disputed claims : see Josephs v. Morton (1916) 26 D. L. R. 433. 73. The liquidator may give notice in writing to creditors Creditors who have sent in their claims to him, or of whose claims he has required to notice, and whose claims he considers should not be allowed claims, without proof, requiring such creditors to attend before the court on a day to be named in such notice and prove their claims to the satisfaction of the court. 2. In case any creditor does not attend in pursuance of such Disallow- notice his claim shall be disallowed, unless the court sees fi't ^J^^^ •?" to grant further time for the proof thereof. 3. If any creditor attends in pursuance of such notice, the Disallow- court may on hearing the matter allow or disallow the claim of ^"'^^. °° such creditor in whole or in part. 52 V., c. 32, s. 14; 55-56 V., '"^' c. 28, s. 1. The court can not make an order staying proceed- ings under the section pending the disposition of cer- tain selected claims: Re Dominion Trust Co., Critch- ley's Case (1916) 27 D. L. R. 580. As to delay by a creditor in demanding particulars of contestation by the liquidator: see In re Montreal Cold Storage, &c., Co., Midlines Claim (1901-2) 4 Q. P. R. 340. See also Re Stratford Fuel, Ice and Construc- tion Co., CoufihUn and Irwin's Claim (1913) 28 O. L. R. 481, affimiod (1914-5) 50 S. C. R. 100. 74. After the notices required by the two last preceding Distribution .ejections have boon given, and the respective times thorein speci- of assets, fiod have expired, and all claims of wbicli proof has boon required by duo notice in writing by the liquidator in that behalf have been allowed or disallowed by the court in whole or in part, the liquidator may distribute the assets of the company or any part thoroof among the persons entitled thereto and without reference to any claim against the company which shall not have then been sent to the liquidator. c;oo DOMINKlX WlNI)IN(i-lTj> A('T. Sect. 74. 2- 'I'li^' liquidator shall not be liable to any person whose ^;— ohiini shall not have been sent in at the time of distributin.c; i^Vi'nUn^ sueh assets or jiart thereof for (he assets or j.art thereof so (listr United. J^ 8., e. l'?!», s. 60. This section is for the protection of the liquidator. The actual distribution of the assets is governed by ss. i)l ff., which see. Rank of 75. In casr any claim or claims shall he sent in to the claims sent liquidator after any partial distribution of the assets of the (iist'ribution company, such claim or claims, subject to proof and allowance as required by this Act, .shall rank with other claims of creditors in any future distribution of assets of the company. R. S., c. 129, s. 60. See s. 72, supra. has bi'i'ii ci>ninieDee(l Duty of ••reditor liolding security. Secured Claims. 76. If a creditor liolds security upon the estate of the company, he shall specify the nature and amount of such security in his claim, and shall therein, on his oath, put a speci- fied value thereon. R. S., c. 129, s. 62. Option of 77. The liquidator, under the authority of the court, may liquidator as £4f]i^i. consent to tlie retention by the creditor of the property to security. * 11*^ and elTects constituting such security or on which it attaches, at such specified value, or he may require from such creditor an assignment and delivery of such security, property and effects, at such specified value, to he paid by him out of the estate so soon as he has realized such security, together with interest on such value from the date of filing the claim till payment. R. S., c. 129, s. 62. Hanking of 78. Ill case of such retention, the difference between the secured value at which the security is retained and the amount of the claim of such creditor shall be the amount for wliich he may rank as aforesaid. R. S., c. 129, s. 62. S*fiirity by negotiable in.strument. Revalua- tion. 79. If a creditor holds a claim based upon negotiable instru- ments upon which the company is only indirectly or secondarily liable, and which is not mature or exigil)le, such creditor shall be considerofi to hold security within the meaning of the three last preceding sections, and .shall put a value on the liability of the person primarily liable thereon as being his security for the payment thereof. 2. After the maturity of .such liability and its non-payment, he .shall be entitled to amend and revalue liis claim. R. S., c. 129, .s. 62. SECURED CLAIMS. 823 80. If the security consists of a mortgage upon ships o' Sect. 80. shipping, or upon real property, or of a registered judgment, or an execution binding real property which is not bv some other ^^^unty by provision ot this Act invalid lor any purpose or creating a i-eai property lien, claim or privilege upon the real or personal property of or a ship, the company, tlie property mortgaged or bound by such security shall only be assigned and delivered to the creditor, — (a) subject to all previous mortgages, judgments, execu- Assignment tions, hvpothecs and liens thereon, holding rank and ^^'it^^ defec- • .,-//. , . , . -, ' ^ tive title, priority before his claim ; and, (b) upon his assuming and binding himself to pay all such Under oWi- previous mortgages, judgments, executions, hypothecs and nation, liens ; and, (c) upon his securing the estate of the company to the satis- Subject to faction of the liquidator against any claim by reason of i"'^ena°ity. such previous mortgages, judgments, executions, hvpo- thecs and liens. R. S., c. 129, s. 63. 81. If there are mortgages, judgments, executions, hypo- j,, (.^se of thecs, or liens upon such ships or shipping or real property sui)soqueut subso(iuent to those of such creditor, he shall only obtain the *" ''*'"'^ '^" property, — (a) by consent of the subsequently secured, creditors ; or, Consent. (b) upon their filing their claims specifying their security Claims filed, thereon as of no value ; or, (c) upon his paying them the value fiy tliom placed theroon • Value paid, or, (d) upon his securing the estate of the company to the ('ompany .satisfaction of the liquidator -against any claim by rea.son udomnified. of such subsequent mortgages, judgments, executions, iiypothecs and liens. K. S., c. 129, s. 63. 82. Upon a secured claim being filed, with a valuation of Autliority to the security, the liquidator shall procure the authority of the I'^'taiu court to con.sent to the retention of the security by the creditor, "^^'^^^^'J- or shall require from him an assignment and delivery thereof. R. S., c. 129, s. 61. A creditor is a secured creditor if he has any secur- creditors ity for liis claim upon the property of the company: Re I,',','l|]j.'if]^. Printing Co. (1878) 8 Ch. D. 535. And a landlord who has exercised his ri^'ht of distress before the winding- up, is a secured creditoi' : Thomas v. Patent Lionite Co. (1881 ) 17 Cli. ]). 250, or a person who has ol)tained the appointment of a receiver before the winding-up: Anglo-Italian Bank v. Davies (1878) 9 Ch. D. 275. A meclianics' lien is a sccuicd claim under the Winding-up Act : lie Empire Brewing and Malting Co., Roiirke & Cass' Claims (1892) 8 Man. 424. 824 DOMINION WINDING-UP ACT. Sees. 76-82. AVhoro a soenrit y is trausferrod out and out to the s;.,.m-od creditor, he is not a secured creditor witJiin tlie section : claims. Bourheau Co. v. Stewart Macdonaid Export Co. (1917) Que. 26 K. B. 315. vahiLng Sccurcd Creditors cannot be compelled to file their c hums and prove under the Act if they prefer to rely on I heir security and not ask to share in the distribution of the assets : In re Brampton Gas Co. (1902) 4 0. L. E. r309; Capital Trust v. Yelloivliead Pass Coal Co. (1916) 27 D. L. E. 25; 9 A. L. E. 463. But see In re The Lenora Mount Sicker Copper Co. (1900-3) 9 B. C. R. 471. A creditor cannot withdraw his valuation or enforce his security: Re BritisJi Columbia Pottery Co. (1895) 4 B. C. E. 525; but where secured creditors without any intention to submit to the adjudication of their claims in the winding-up have filed affidavits in proof thereof leave has been granted for the with- drawal of the claims: In re Brampton Gas Co., supra. As to the right of revaluing securities, see Box v. Birds Hill Sand Co. (1912) 8 D. L. E. 768; (1913) 12 D. L. E. 556; Canada Furniture Co. v. Banning (1918) ;^9 D. L. E. 313, 319. When a creditor had inadvertently proved without valuing his security he was allowed to amend his proof : Be Lake Wi)inipe(j Transportation. Co. (1892) 8 Man. E. 463; Be Henry Lister d Co. [1892] 2 Ch. 417, and see Re Schofield (1879) 12 Ch. D. 337; i^e Arden (1884) 14 Q. B. D. 121; Re Bamed's Banking Co., 18 W. E. 944. When a mortgage is made by a company to a trustee to secure several creditors of the company, any one creditor has the right to value his interest in such security and maintain his claim on the estate except as reduced by such valuation. The liquidator cannot in- sist on either getting an assignment of the whole secur- ity or relegating him to his rights under the security and refusing to let him rank, but can only force him to assign his interest therein. The principle of the Act in reference to secured creditors is one of election and not forfeiture: Re Thunder Hill S Boivker (1896) 5 B. C. E. 21, and see Moor v. Anglo-Italian Bank, 10 Ch. D. 681, p. 689; ^a; p. Schofield (1879) 40 L. T., N. S. 464, 823; i^e Lister [1892] 2 Ch. 417. SECURED CLAIMS. 825 As to the rig-lit of creditor to rank on estates of Sees. 76-82. joint debtors and also prove under above section, see Ontario Bank v. Chaplin (1891) 20 S. C. R. 152. A secured creditor who has exhausted his security without satisfying his debt is not entitled to apply the proceeds of the security in payment, first of interest subsequent to the mnding-up and then in reduction of principal and to prove in the winding-up for the bal- ance of the principal. His proof must be limited to what was due for principal and interest at the com- mencement of the winding-up after deducting there- from proceeds of sale or realization received in respect of the security: Re London, etc., Hotels Co. [1892] 1 Ch. 639, following Ex p. P enfold (1871) 4 D. G. & Sm. 282. It should be noted, however, that these cases were deicided under the English Rules. A secured creditor has a right to apply for and obtain leave to bring or proceed mth an action for enforcing his securities: Lloyd v. David Lloyd d Co. (1877) 6 Ch. D. 339: Longdendale, etc., Co. (1878) 8 Ch. D. 150; JosJiua Stubhs, Ltd. [1891] 1 Ch. 475; London, etc., Hotel Co. [1892] 1 Ch. 639. The mere fact that a winding-up order has been made does not prevent a debenture holder or mort- gagee of the company from bringing an action to realize his security: hi re Longdendale Cotton Co. (1878) 8 Ch. D. 150; and in Lloyd v. David Lloyd S Co. (1877) 6 Ch. D. 339, it was held that when an order has been made to wind up a company a mortgagee who has commenced an action against the company to realize his security ought to have leave under section 87 (our section 22) to proceed with his action under special circumstances or unless he can obtain the same relief in tlie winding-up. And see In re Joshua Stubhs, Limited [1891] 1 Ch. 187. So also a trustee for bondholders may cause him- self to be put into possession of the assets without pre- judice to the rights of privileged creditors: Canadian Brass, dc, Co. v. Duclos (1917-8) Que. 18 P. R. 206. In Alberta it has been held that leave cannot be re- fused on an application under the Alberta Winding-up 82() DOMINION WINDING-UP ACT. Sees. 76-82. Rules unless the Court is prepared to say that tlie sT-cun^ '~ in()rtt>'a,iive's claim will be at once recognized and diiims. allowed in the liquidation proceedings: Capital Trust V. YcU airhead Pass, Sc. (191G) 33 W. L. R. 873. See further the note under ''Bonds," supra, at p. 406, where the matter is discussed; also s. 133, 'utfra. On a petition by a mortgagee in the winding-up pro- ceedings, under the Act, asking for the conveyance to him by the liquidator of the company's equity of re- demption, the Court has jurisdiction to make the usual order for foreclosure or sale. It is a matter of discre- tion with the Court whether an action will be directed or sunnnary proceedings sanctioned: Re Essey Land and Timber Co.; Trout's Case (1892) 21 0. R. 367. The Court ought not to confirm a sale by a mort- gagee from the company, until the security has been valued, and offered to the liquidator at that value : Re Thunder Hill Mining Co. (1894) 3 B. C. R. 351. A secured creditor who realizes his security is entitled to apply the proceeds in or towards payment of his principal, interest, and costs: London, Windsor, ■ etc., Co. [1892] 1 Ch. D. 639. A subsequent encumbrancer is not bound to i)rove as a secured creditor where the property has already been surrendered under the Act. to a prior mortgagee, and can, therefore, not be given up to the claimant as required by s. 76: In re Ottawa Porcelain Co. (1900) 31 0. R. 679, 692. As to compromise of secured claims and double ranking, see Re Stratford Fuel Ice, etc., Co., Coufihlin and Invin's Claim (1913) 28 0. L. R. 481 affirmed as Broun v. Coughlin (1914-5) 50 S. C. R. 100. The Crown has no right to displace creditors hold- ing a security upon specific assets : Re Imperial Paper Mills, Diehl v. Carritt (1915) 7 0. W. N. 630. Dividend Sheet. Must pro- 83. Til the preparation of tlie dividend sheet, due re.^ard vide for shall be had to the rank and privilege of every creditor, but no and'-secured dividend shall be allotted or paid to any creditor holding claims. .security upon the estate of the company for his claim until the amount for wliich he may rank as a creditor upon the estate, DIVIDEND SHEET. 827 as to dividends therefrom, is established as herein provided. Sees. 83-84. E. S., c. 129, s. 65. ■ 84. Xo lieu or privilege shall be created — No lieu by execution, (a) upon the real or personal property of the company, f or ^^J^y^fg^^g, the amount of any judgment debt, or of the interest there- meut_ of on, by the issue or delivery to the sheriff of any writ binding up. of execution, or by levying upon or seizing under such writ the effects or estate of the company ; (b) upon the real or personal property of the company, or upon any debts due or accruing or becoming due to the company, by the filing or registering of any memorial or minute of judgment, or by the issue or taking out of any attachment or garnishee order or other process or proceed- ing;— if, before payment over to the plaintiff of the moneys actually levied, paid or received under such writ, memorial, minute, attachment, garnishee order or other process or proceeding, the winding up of the !)usiness of the company has commenced : Provided that this section shall not affect any lien or privilege jj^^ for for costs which the plaintiff possesses under the law of the costs province in which such writ, attachment, garnishee order or •^'•'^^^p*^ • other process or proceeding was issued or taken out (7-8 Ed. VTT., c. 75, s. 1). Compare Imperial Bankruptcy Act, 1883, s. 45 ; On- tario Assignments and Preferences Act, R. S. 0. 1914, c. 64, s. 14. The effect of this and other sections is to show that 'the power of dealing with and collecting the assets after the making of the winding-up order is vested in the licjuidator alone': Shaver v. Cotton (1896) 13 A. R. 426, per Osier, J.A., at p. 434. The section goes 'only to tlie extent of proliibiting tlio creation of any lien or privilege by the issiu; or delivery to the sheriff of any execution, or by tlie tiling or registering of any memorial of judgment, or by the issue or making of any attachment or garni sliee order or other process or proceeding,' jxt Barry, .1., in (lood v. \'cj)is'niiiil Lum- ber Co. (1911-13) 41 k. B. R. 57, at p. 75. It applies only to judicial proceedings: E. C. ColircU Caudif Co. (1899-02) 35 N. P». I^ 613; 7^e Shirley.^' Ltd. (1916) 29 D. L. R. 273, and to ijrofccdings commenced before the wiii(]i?iu'-ii|), ihid. 828 DOMINION WINDING-UP ACT. Sect. 84. liien or ju-ivilege. Application of the section. Mechanics' liens. Woodmen's liens. "Plio ox])rossioii lion is generally used to designate " a right which a party has to retain that which is in his ])ossession or power until certain demands are satis- tied, and a particular lien may arise by mere operation of law:' In re Heyden, 29 V.C.q.B. 262, 264. 'The word privilege is frequently used in the Lower Canada laws as referring to certain preferential or secured rights or claims, and in all probability that word was used in reference to that province, and the word lien as aii])licablo to Upper Canada,' ibid., 2G3, 264. The section does not destroy mechanics' liens, so that a lien duly registered for materials supplied and work done prior to the service of the winding-up peti- tion will have priority over ordinary creditors : Re Clinton Thresher Co. (1910) 15 0. W. E. 319; 1 O. W. N. 455; Re The Empire Breiving and Malting Co., Rourke and Cass' Claim (1891) 8 Man. R. 424; and see Re Ibex Co. (1902) 9 B. C. R. 557. The lien arises by virtue of doing the work and registering the statement of claim: Re The Empire Brewing Co., supra. If the statement of claim required by the Mechanics' Lien Act has not been filed before the winding-up leave should be obtained under s. 22. Similarly as regards liens under the Woodmen's Lien Act, C. S. N. B., 1903, c. 148, the lien arises when the work is done: Good v. Nepisiguit Lumber Co. (1911-13) 41 N. B. R. 57. In both cases the plaintiffs will be entitled to an order allowing them to proceed and enforce their liens. While the lien holders will be prevented by s. 23 from pursuing their remedies without leave, which is obtainable by an order of the Court on summary peti- tion under s. 133, s. 23 does not apply to the mere filing of a claim of lien. Such may bo filed after the winding-up has commenced without obtaining permis- sion : Good V. Nepisiguit, supra., at p. 74. Section 84 applies to the creation and not to the enforcement of a lion, and both sections 23 and 84 apply to creditors only and not to outsiders : Good v. Nepisiguit, supra. So in the last mentioned case where the plaintiffs (woodsmen employed by contrac- LIEXS. 829 tors who were engaged in cutting timber for a company Sect. 84. subsequently ordered to be wound up) were not credi- ~ ~ tors of the company, it was held that s. 84 did not stand in their way so as to prevent them from enforcing their lien. For a case where maritime liens for seamen's wages were considered see In re The Fort George Lumber Co. (1913) 48 S. C. R. 593. With respect to a solicitor's lien the share regis- Lien on ter and minute book are not subject to such lien which the directors have no power to create; as to other documents wliich come into the solicitor's hands pend- ing the winding-up the solicitor can not assert any lien which would interfere with the conduct of the winding-up; but as to documents regarding which there is no special provision in the Companies Act or the governing documents of the company, e.g., letters of application and other papers relating to the allot- ment of shares, the winding-up order will not defeat any existing valid lien : In re Capital Fire Assurance Association (1883) 24 Ch. D. 408 ; Re Residential Build- ing Co. (1916) 2G Man. L. R. 638, distinguishing Re Alpha Mortgage, &c., Co., 22 B. C. R. 513. Production of such documents could, however, be compelled under s. 119. See also Re Boston Wood Rim Co. (1904) 5 0. W. R. 149. Where documents come into the hands of soli- citors in the general course of their business for the company, tliey have only a ''passive" or "retaining" lien thereon. Production of such documents "without prejudice" to such lien will not confer priority on their claim over the claims of other creditors: Executors and Administrators Trust Co. v. Seaborn (1916) 27 D. L. R. 427. See also s. 120. AVhere a landlord has become entitled to a prefer- I'lcforentiai ential lion for rent conferred on him by s. 38 of the 'i.,',V,noids. Landlord and Tenant Act, R. S. 0. 1914, c. 155, on an assignment for the benefit of the creditors of the lessee occurring, if the lessee company is subsequently wound up under the Winding-up Act the assets to which the 830 DOMINION WINDING-UP ACT, Sect. 84. Liens. Executions. lion attachod vest in tlie liquidator subject to the lien, and if any order of the Court is required to make the lien available it may be granted: Re Fashion Shop Co. (1915) 33 0. L. R. 253; 21 D. L. R. 478. See also Brodeur Company v. Merrill (1917) 26 Que. K. B. 461. Where a landlord has already distrained before the winding-up order was made, the distress will not be imalidated by the order, for s. 22 only applies to pro- ceedings taken after the order is made : E. C. Colwell Candy Co. (1899-02) 35 N. B. R. 613. So also a con- structive seizure under verbal arrangement between agents of the lessor and lessee prior to the winding-up order will entitle the landlord to hold the goods dis- trained as against the liquidator: Be Shirley s, Ltd. (1916) 29 D. L. R. 273. The majority of the Court in E. C. Colwell Candy Co., supra, necessarily held that a distress is not a "proceeding" within the meaning of s. 84. Boyd, C, in Fuches v. Hamilton Tribune (1884) 10 P. R. 409, took a different view, stating that s. 84 was fatal to a claim for a preference, if, before the pay- ment over of the moneys, made under the distress, the "v\'inding-up of the company had commenced. It should be observed, however, in that case that no steps had been taken by the lessors to assert their claim until the winding-up had begun. The view of Boyd, C, was dis- approved and E. C. Colivell Candy Co. followed in Re Shirleys, Ltd. (1916) 29 D. L. R. 273, where the Court held that a distress levied before the winding-up, not being a judicial proceeding, was not affected by the section. So also where the company had taken posses- sion under a lease in pursuance of an invalid resolu- tion, it was held that the company accepted the tenancy on the terms set forth in the resolution and the land- lord was entitled to his preferential lien where he had distrained before the winding-up : Be D. S S. Drug Co. (1917) 31D. L. R. 643. The result of the section is that a writ of execution can not become a lien on the property of the company after the service of notice of presentation of the wind- ing-up petition, which is the date of the commencement of the winding-up : In re Ideal House Furnishing Co., LIENS. 831 Steivart McDonald Co. Case (1907-8) 17 Man. L. K. Sect. 84. 576. Ill that case Mathers, J., doubted what the result would be under s. 84 as it then stood where the sheriff had sold the goods of the comioany and had the pro- ceeds of sale in his hands when notice of the petition was served, observing that under the prior Act, R. S. C. 1886, c. 129, s. QQ, where the section was not sub-divided into subsections as in R. S. C. 1906 c. 144, s. 84, the money w^ould have become the property of the liquida- tor. The section was subsequently repealed by 7 & 8 Ed. VII. c. 75, and a new section substituted under which this result would presumably follow. A judgment creditor who has an execution in the Lien for sheriif's hands at the commencement of the winding- ^"^^^^^^ up is protected to the extent of his costs: Re Hey den, 29 U. C. Q. B. 262 ; Re Fair and Rurt, 2 U. C. L. J. N. S. 216. The fees of the sheriff will also be allowed up to a certain date, e.g., where a sheriff was entitled to hold goods seized before the winding-up until an order was made for their delivery up to the liquidator his fees and possession money were allowed until the date of such order: Re Oshaiva Heat, Light and Poiver Co. (1906) 8 0. W. R. 414. A sheriff is not entitled to poundage or possession money under an execution levied subsequently to a winding-up order, the seizure being illegal under s. 23; and a payment out of the company's funds to avoid or in consequence of such a seizure is illegal and can be demanded back by the liquidator: Richards v. Producers, dc, Co. (1914) 17 D. L. R. 588. Assuming a legal seizure, the onus is on the sheriff claiming i)()undago to satisfy the Court that a compromise payment is the direct consequence of the seizure and not an agreement entered into previously })etw('en the parties, ibid. See also the following deci- sion (nnrcportcd) of the Master-in-Ordinary in On- tario: Re Zoological, &c., Hocieiy; Re Piper Ex p. Ros- 7rell d Gait. Solicitors held entitled to a lien on a fund coming to H. L. Piper or his assignee in respect of the costs incurred in establishing the right of Piper to the fund, and also for the costs of defcndiiiu- Pi))er from the claim made upon him in the winding-up proceedings as ati allcuf'l (■•lilt I'lbiitory. 832 Sect. 84. DOMINION WINDING-UP ACT. If the p.. fa. is not in tlie sherilf's hands to be exe- cuted, but he has instructions not to seize, tliere is no lien for costs: lie Saw Bill Lake, Sc, Co. (1903) 2 0. W. R. 1143. Claims or dividend may be i>l)jf>cted to. Contestation of Claims. 85. Any liquidator, creditor or contributory, or shareholder or member may object to any claim filed with the liquidator, or to anv dividend declared. s. 15. R. S., c. 129, s. 67; 52 v., c. 32, Dav to be fixed for hearing. Objections 86. If a claim or dividend is objected to, the objections to be filed in j.i,a!l be tiled in writin2r with the liciuidator, together with the evidence of the previous service of a copy thereof on the claim- ant. Answers and 2. The claimant shall have six days to answer the objec- replies. tions, or such further time as the court allows, and the contes- tant shall have three days to reply, or such further time as the court allows. R. S., c. 129, 67. 87. Upon the completion of the issues upon the objections, the liquidator shall transmit to the court all necessary papers relating to the contestation, and the court shall then, on the application of either party, fix a day for taking evidence upon the contestation, and hearing and determining the same. R. S., c. 129, s. 67. 88. Tlie court may make such order as seems proper in res])ect to the payment of the costs of the contestation by either party or out of the estate of the company. E, S., c. 129, s. 67. 89. If, after a claim or dividend has been duly objected to, the claimant does not answer the objections, the court may, on the application of the contestant, make an order barring the claim or correcting the dividend, or may make such other order in reference thereto as appears right. R. S., c. 129, s. 67. Security for 90- fl^e court may order the person objecting to a claim or costs. dividend to give security for the costs of the contestation within a limited time, and may, in default, dismiss the contestation or stav proceedings thereon, upon such terms as the court thinks" just. R. S., c. 129, s. 67. Section 85 applies only to those claims which are made in the winding-up proceedings and since a secured creditor is not bound to enter such claims for the pur- pose of enforcing his security a general creditor has no standing to attack such security, the enforcement of Costs. Default in answer by claimant. CONTESTATION OF CLAIMS. 833 which is sought by an independent foreclosure action : Sees. 85-90. Capital Trust v. Yelloivhead Pass Coal Co. (1916) 27 D. L. R. 25; 9 A. L. R. 463; but cf. Re The Lenora Mount Sicker, Sc, Co. (1900-3) 9 B. C. R. 471. See Ward v. Montreal Cold Storage Co. (1904) Que. 26 S. C. 310; Re Standard Cobalt (1911) 18 0. W. R. 555. The liquidator may not, by counterclaiming for damages against a director by way of contestation of the latter 's claim against the company as a creditor, in effect take misfeasance proceedings against him: Re Boston Shoe Co. (1914) 16 D. L. R. 856. See Re Union Brewery Co. (1903-4) 6 Que. P. R. 395; i^e Laurie En- gine Co. (1907) 8 Que. P. R. 59. As to a claimant obtaining security for costs from a contesting creditor, see In re Montreal Cold Storage and Freezing Co., Ltd. (1901-2) 4 Que. P. R. 294. Distribution of Assets. 91. The property of the company shall bo applied in satis- Distribution faction of its debts and liabilities, and the charges, costs and of property expenses incurred in winding-up its affairs. E. S., c. 129, s. 58- <*^ company. 92. All costs, charges and expenses properly incurred in ^yjnding-up the winding-up of a company, including the remuneration of the expenses liquidator, shall be payable out of the assets of the company, ^f ^^^^^ °"* in priority to all other claims. R. S., c. 129, s. 91. The effect of the section is to confer priority only on claims against the company in existence at the time when it wont into liquidation. Thus, where an order authorizing a loan to a liquidator provided that the loan should be a first charge on the assets subject only to existing liens, charges or encumbrances, the lender was held entitled to priority over the costs and charges of the winding-up proceedings, including the liquida- tor's costs and the solicitors' fees : Keyes v. Hanington (1913) 13D. L. R. 139. Where a company in liquidation is a party to an action and costs are given against it these take priority over the costs of the winding-up: In re Horne Invest- D.CA.— .5.3 834 DOMINION WINDING-UP ACT. Distribution of assets. Sees. 91-92. />/(>// ^Society (1880) 14 Cli. D. 1G7 ; Pacific Coast Sinidicate (1913) 2 Cli. 2G3. In such a case the party awarded costs is entitled to immediate payment : In re Dominion of Canada Plumbago Co. (1884) 27 Ch. D. 33. This priority in favor of the successful litigant does not extend to assets realized by litigation undertaken by the liquidator, the costs of which have not been paid: In re Baden Machinery Co. (1906) 12 0. L. R. G34, 636. In the same case it was held that the liquida- tor should also have priority for a reasonable sum as his compensation for his care and trouble in such reali- zation. ■ See also Be People's Trust Co. (1918) 25 B. C. R. 138; Scott V. Siemens (1912) 18 0. W. R. 538. Distributijn of surplus of property of compauy. Return of capital. 93. The Court shall distribnte among the persons entitled thereto any surplus that remains after satisfaction of the debts and liabilities of the company, and the winding-up charges, costs and expenses, and unless otherwise provided by law or- by the Act, charter or instrument of incorporation, any property or assets remaining after such satisfaction shall be distributed among the members or shareholders according to their rights and interests in the company. li. S., c. 129, ss. 51 and 58. After the company's creditors have been paid and the costs of the winding-up have been satisfied it is the duty of the liquidator to divide the balance (if any) of the assets among the shareholders or members of the company. Such distribution will be made among them according to their rights under the provisions of the letters patent and by-laws or memorandum and articles of association. Preference shares commonly carry a preferential right to the return of capital on a winding-up, in which case the amounts paid in by the preference share- holders must be repaid to them before the common shareholders get anything. See further the notes to s. 47 of the Companies Act. Where the preference shares do not confer such right or where the shareholders are all of one class, the surplus assets (unless there is some provision to the contrary in the governing documents) are divisible DISTRIBUTION OF ASSETS. 835 among the shareholders equally: In re London India Sees. dl-d2. Rubber Co. (1867) 5 Eq. 519. If some shareholders have paid more than others, the liquidator may make calls pursuant to s. 57 for the purpose of adjusting the rights of the contributories : Ex parte Maude (1871) 6 Ch. 51, 55; see also Re Mon- arch Bank of Canada (1913) 32 O. L. R. 207. Where the assets are sufficient to permit of equalization without the making of calls, the surplus will be paid to the shareholders who have paid more than others to the extent of such excess and the balance only will be equally divisible among all the shareholders : Re Wake- field Rolling Stock Co. (1892), 3 Ch. 165. See also Re Colonial Assurance Co., Ltd. (1916) 29 D. L. R. 488. Whether the preference shareholders will be Further entitled to participate in the surplus assets after the after^retui^ri^ capital has been returned on all the shares depends on of capital. the construction of the documents whereby the rights of the preference shareholders are defined. In the ab- sence of restrictive provisions they do so participate with all the shareholders in proportion to the nominal value of the shares where the shares are of unequal amount: i?e Espuela Cattle Co. No. 2 (1909) 2 Ch. 187. See also the notes under s. 47 of tlie Companies Act. Where the right of the preference shareholders to par- ticipate further was excluded the common shareholders were lield entitled to the surplus after repayment of capital to all shareholders, such surplus being divisible in proportion to the amount of their shares and not the amount paid thereon: Morrow v. Peterborough Water Co. (1902) 4 O. L. R. 324, following Birch v. Cropper (1889) 14 App. Cas. 525. Where payments have been made by shareholders in Payment^m advance of calls, as may be done under s. 61 of the Do- eiug'""^ " million Companies Act, such shareholders are entitled to the return of such sums with interest before other shareholders of equal rank receive anything: Re Wake- field Rolling Stock Co. (1892) 3 Ch. 165, 174. 836 DOMINION WINDING-UP ACT. Sect. 94. Fraudulent Preferences. CiMtiiitous 9^- -^^' gratuitous contracts, or conveyances or contracts ioiitr;u-ts without consideration, or witli a merely nominal consideration, prosiimod to i-gj^pecting eitlier real or personal property, made by a company intent to in respect to which a winding-up order under this Act is after- ilefraud wards made, with or to any person whatsoever, whether a cioci ors. creditor of the company or not, within three months next preced- ing the commencement of the winding-up, or at any time after- wards, shall be presumed to have been made with intent to defraud the creditors of such company. R. S., c. 129, s. 68. ('outracts 95. All contracts by which creditors are injured, obstructed obstnicUne ^^ delayed, made by a company unable to meet its engagements, creditors and in respect to which a winding-up order under this Act is presumed to afterwards made, with a person whether a creditor of the com- intent. V^'^^J 0^ ^^^t, who knows such inability or has probable cause for believing such inability to exist, or after such inability is public and notorious, shall be presumed to be made with intent to defraud the creditors of such company. R. S., c. 129, s. 68. Compare Dominion Insolvent Act, 1875, s. 130, and the Dominion Insolvent Act, 1869, s. 86. Compare also the Imperial Companies' Act, 1862, s. 164, by which the bankruptcy law regarding fraudulent preferences, for the time being in force, is made applic- able to a company being w^ound up under the Imperial Act. Two classes of contracts are, under ss. 94 and 95, presumed to be made with intent to defraud creditors : (1) Those made without consideration, or with a merely nominal consideration, within three months be- fore, or at any time after the commencement of the winding-up (s. 94). (2) Those in which there may be consideration, but which are made with a person who knows, or has prob- able cause for believing the company to be unable to meet its engagements, and in respect of which a wind- ing-up order under the Act is afterwards made, if such contracts injure, obstruct or delay creditors (s. 95) : Skinner v. McLeod, 15 N. B., 2 Pugs. 134. In Newton v. Ontario Bank, 13 Gr. 652, it was said that the second branch of s. 130 and s. 132 of the Insolvent Act, corres- XJonding to s. 95 and s. 97 of the Winding-up Act might be read together, and that the latter section was . FRAUDULENT PREFERENCES. 837 in substance a re-enactment of 13 Eliz., c. 5, and did not Sees. 94-95. apply to creditors. But the section as it now stands is expressly made applicable to creditors. An overdue debt is consideration which takes the Gratuitous case out of the section: Adams v. Bank of Montreal^^^^^^^^^' (1901-2) 32 S. C. R. 719. A mortgage is included in the term 'contract:' Canadian Bank of Commerce v. Smith (1911) 17 W. L. E. 135; Hammond v. Bank of Ottaiva (1910) 22 0. L. R. 73. The presumption of intent to defraud creditors arising from the transaction taking place within three months of the winding-up is rebuttable : Hammond v. Bank of Ottawa, supra. In this case pressure by the creditor was shown. See also Campbell v. Barrie • (1871) 31 U. C. R. 279, 298, 290. The expression 'unable to meet its engagements,' points to an insufficiency of assets if realized under fair conditions: Canadian Bank of Commerce v. Smith (1911) 17 W. L. R. 135, 143; Dominion Bank v. Coivan (1887) 14 0. R. 465. The phrase ' with a person who knows such inabil- ity, or has probable cause for believing such inability to exist' does not import actual knowledge on the part of the creditor, nor does it seem necessary that he should have any actual belief on the subject, and belief will not protect a party if there is probable cause for be- lieving otherwise : Davidson v. Mclnnes, 24 Gr. 414. The presumption mentioned in s. 95 is rebuttable on proof of pressure by the creditor: Adams v. Bank of Montreal (1901-2) 32 S. C. R. 719, affirming (1896-01) 8 B. C. R. 314. The following are cases in which the transaction was set aside under the combined effect of the sections of the hisolvcjicy Act corresponding to tliese sections and s. 97 : PaipicW Hendry (1S73) 20 (Jr. 142; Coati's v. Joselin (1866) 12 Or. 524; Brooks v. Taylor (1876) 26 C. P. 443; Churcher v. Cousins (1869) 29 U. C. R. 540; McFarlane v. McDonald (1874) 21 Gr. 319; Squire v. Watt (1869) 29 U. C. R. 328; Newton v. Ontario Bank (1869) 15 Gr. 283; Appeal from 13 Gr. 652. 838 DOMINION WINUING-Ur ACT. Sect. 96. 96. A I'ontraet or convoynnce for emisidcr.-ition, respecting — either real or personal property, by which ereililors are injured wUh'ooS ^^'^ obstrncted, made by a company unable to meet its engage- company or not, and before such inability has liecome ])ublie and notorious, but within thirty days next before the commencement of the winding-up of the business of such company under this Act, or at any time afterwards, is voidable, and niav be set aside by any court of competent jurisdiction, upon such terms as to the protection of such person from actual loss or liability by reason of such contract as the court orders. R. S., c. 129, s. 69. Compare section 131 of the Insolvency Act of 1875, and section 87 of the Insolvency Act, 186'9. In the following cases the transaction was set aside as a fraud on creditors: Black v. Fountain (1876) 23 Gr. 174; Masson v. McGowan, 2 L. C. L. J. 37. The section does not apply where the purchaser re- ceives full value for the goods he buys : Bank of Mont- real V. MacWhirter (1867) 17 C. P. 506. Where the transferee knows that the debtor is un- able to meet his obligations the provision as to protec- tion does not apply: Kalus v. Hergert (1875) 1 A. R. 75. See also Mathers v. Lynch (1867) 27 U. C. R. 244; and Skinner v. McLeod, 15 N. B., 2 Pugsley 134. See also Walter v. Leduc (1915) 8 W. W. R. 360; Larue v. Dohan (1915) 48 Que. S. C. 374. Contracts 97. All contracts or conveyances made and acts done by a made with companv respecting either real or personal 'property, with dSud^or intent fraudulently to impede, obstruct or delay the creditors delay of the company in 1heir remedies against the company, or creditors. ^^,j^]^ intent to defraud the creditors of the company or any of them, and so made, done and intended with the knowledge of the person contracting or acting with the company, whether a creditor of the company or not, and which have the effect of impedmg, ob.structing or delaying the creditors in their reme- dies, or of injuring 'them, or any of tboni, shall be null and void. R. S., c' 129, s. 70. Compare section 132 of the Dominion Insolvency Act, 1875, and section 88 of the Dominion Insolvency Act, 1869. The usual interpretation placed upon the word 'void' in acts of this kind is 'voidable': The Meri- void. FRAUDULEXT PREFERENCES. 839 den Britannia Co. v. Braden (1894) 21 A. R. 352. Sect. 97. And the latter case would seem to indicate that a good title can be conferred by a person who holds what is under the Act a void title : In re Van Sittart [1893] 2 Q. B. 277; In re Brail [1893] 2 Q. B. 381 ; In re Carter and Kenderdine's Contract (1897) 1 Ch. 776. A banking firm in Toronto having become embar- rassed applied to the plaintiffs, to whom they had owed $50,000, to advance $15,000 more, the debtors agreeing to secure both debts by a mortgage on the real estate of one of the partners. The plaintiffs made the advance and obtained tlie mortgage. In less than three months thereafter the debtors became insolvent. Though they were indebted beyond their means of paying at the time of executing the mortgage, yet they did not con- sider themselves so, nor were the mortgagees aware of it. The mortgage was not given from a desire to prefer the mortgagees over other creditors but solely as a means of obtaining the advance which they thought would enable them to go on mth their business and pay their creditors. As respecting the antecedent debt it was held that the mortgage was valid as against the assignee: Royal Canadian Bank v. Kerr (1870) 17 Gr. See also the following cases adopting the same prin- ciple: AUan V. Clark son (1870) 17 Gr. 570; Risk v. Sleemin (1874) 21 Gr. 250; Jackson v. Boivman (1867) 14 Gr. 156 ; Ilyman v. Cuthbertson (1886) 10 0. R. 433 ; Ross V. Dinrn (1886) 16 A. R. 552. Actual knowledge on the part of the creditor, not mere constructive notice, is necessary under this clause. A note given in violation of the law laid do^vn in this section has been held to be an absolute nullity and to be void, ab initio, even in the hands of a third party who was an innocent liolder for value before maturity: Davis V. Muir (1869) 13 L. C. J. 184. 98. If iiiiy s;il.'. deposit, pledge or transfer is made of any <^.,,g ^j. pro]K'r(y, renl or jK-rsonal, by a company in rontomplaiion of trimsfor in insolvciK-y niuler tliis Act, by "way of security for payment to any ','i|',l,''of'^ '^' crediior, or if any property real or personal, movable or immov- insolvency, able, goods, effects or vahiable socnrity, are given by way of payment by sucb conipnny lo any creditor, whereby such credi- 840 DOMINION WINDING-UP ACT. Sect. 98. toi' obtiiins or will Dhtiiiu an unjust prel'iTcnce over the other — creditors, sucli sale, deposit, pledge, transfer or payment shall lie null and void; and the subject thereof may be recovered back for the benefit of the estate by the liquidator, in any court of. competent jurisdiction. Presumption 2. If such sale, deposit, pledge or transfer is made within if \yitbin thirty days next before the commencement of the winding-up "' "^ '''" under this Act, or at any time afterwards, it shall be presumed to have been so made in contemplation of insolvency. R. S., c. 1-39, s. 71. Fraudulent Preferences. Fraudulent Thls section is taken from and is substantially the same as section 133 of the Dominion Insolvent Act of 1875, which was taken from section 89 of the Act of 1869. There are two points to be noted in connection with the section. First, that the doctrine of pressure has been held not to apply; secondly, that the presumption that if made within 30 days it is made in contemplation of insolvency, is rebuttable. The case of Davidson v. Ross (1876) 24 Gr. 22, decided that the doctrine of pressure had no applica- tion to tliis section. The cases decided under the English Bankruptcy Acts were distinguished on the ground that there the i:itention is made an ingredient, while under this sec- tion it is simply a question of what effect the transfer, etc., will have coupled with the contemplation of in- solvency. " If it has the effect of preventing the ratable distribution of an insolvent estate by transferring assets in security for or satisfaction of a claim which would not be entitled to priority over the claims of general creditors upon insolvency supervening," it is an unjust preference. Moss, J., at p. 60. The Court in this case was divided as to whether the presumption referred to in the latter half of the section was rebuttable. It has since been held to be re- buttable : Kirhy v. Rathhun, 32 0. R. 9. And see Web- ster V. Crickmore, 25 A. R. 97, which was decided under the Ontario Act respecting assignments and prefer- ences; and see Lawson v. McGeoch, 22 0. R. 474, 20 A. R. 464. FRAUDULENT PREFEREXCES. 841 It remains to be considered whetlier the decision of Sect. 98. Davidson v. Ross has been overruled by decisions on similar enactments such as the Ontario Assignments ■ Act. In this connection it should be observed that the wording of the section under which Davidson v. Ross was decided was so far as material identical with the wording of the section under consideration, and we should be careful in coming to the conclusion that it is overruled by cases decided under sections differ- ently worded. It should also be noted that the case of The Bank of Australasia v. Harris, 15 Moo. P. C. 97, and Harris v. The Bank of Australasia, ibid., 116, were cited in Davidson v. Ross. Now the wording of the section under consideration in The Bank of Australasia V. Harris, and that of the sections under consideration in such cases as Molsons Bank v. Halter, 18 S. C R. 88, and Stephens v. McArthur, 19 S. C. R. 446, might appear to be practically identical with this section; but the Court in Davidson v. Ross held that there was a distinction between a 'preference,' which under the English decisions had been held to mean fraudulent preference and rebuttable by pressure, and an 'unjust preference,' which the Court in Davidson v. Ross held not to mean a fraudulent preference and not rebuttable by pressure. See Judgment of j\[oss, J., at pp. 81, 82, 83. On the above grounds it is submitted that the deci- sions on the Ontario Assignments Act and similar enactments as to pressure do not apply to tliis section, that Davidson v. Ross is still good law, and that there- fore under the above enactment pressure will not vali- date a transaction 'whereby such creditor obtains or will obtain an unjust preference.' And see Kirhij v. Rathhun, supra; Adams v. McCall, 25 U. C. R. 219. For the convenience of readers desiring to con- sider tlie above point further a list is liere given of tlie principal cases decided on the question of profi- Hure: — Stephens v. McArthur (1891) 19 S. C. R. 454; Molsons Bank v. Halter (1890) 18 S. C. R. 88; Jvey V. K7WX, 8 0. R. 451 ; Brayley v. FAlis, 10 0. R. 119; Lonfi V, Hancock, 12 A. R. 137; Johnson v. Hope, 842 DOMINION WINDING-UP ACT. Fraudulent proferences Sect. 98. 17 A. R. 10; Dauies v. Gillard, 21 0. R. 431; Beattie v. Woiger, 24 A. R. 72 ; Laivson v. McGeoch, 20 A. R. 464 ; Webster v. Crickmore, 25 A. R. 97; Gas Light Co. v. Terrell, L. R. 10 Eq. 168; Buckley's Case [1899] 2 Cli. 725. It is not an unjust preference when the transfer is made in pursuance of a bond fide agreement to give a security in return for an advance made, if the agree- ment is made more than thirty days before the com- mencement of the winding-up : Siiter v. The Merchants Bank, 24 Gr. 365; Re Central Bank, 21 0. R. 515; New- ton V. Ontario Bank, 13 Gr. 652; Allan v. Clarkson, 17 Gr. 570 ; Smith v. McLean, 25 Gr. 567, but see Kalus v. Hergert, 1 A. R. 75. But where the taking of the security is deliberately postponed till the debtors are insolvent it cannot be sustained : Webster v, Crickmore, 25 A. R. 97; Breese v. Knox, 24 A. R. 203; Jones v. Kinney, 11 S. C. R. 708. Contempla- tion of insolvency. Contemplation of Insolvency. In Marsh v. Sweeny, 15 N. B., 2 Pugsley 454, de- cided under the corresponding section in the Insol- vency Act of 1869, which section did not contain the words ''under this Act" it was held that the words "in contemplation of insolvency" did not mean in contem- plation of insolvency under the Act. The meaning of this phrase was explained by Pat- terson, J., at p. 69 of the case of Davidson v. Ross as follows : — * I take the object of the law to be to make it the duty of a trader who from the knowledge which he has of his own affairs or of the intentions of his creditors, has reason to apprehend either that proceedings under the Act will be taken against him or that he may have to resort to the Act for relief, to do nothing which will prejudice the ratable distribution of his assets, by giving one creditor an unjust preference over the others, and I apprehend that if under such circum- stances he gives a preference he does so in contempla- tion of insolvency, whether he does it from a desire to favor the preferred creditor or only because that FRAUDULEXT PEEFEKEXCES. 843 creditor has succeeded by urgency in overcoming his Sect. 98. reluctance to give the preference.' Moss, J. A., p. 87, citing Gibson v. Muskett, 4 M. & Gr. 160, says that money was paid in contemplation of bankruptcy 'if it was paid under such circumstances that any prudent man taking a reasonable view of his situation and the surrounding circumstances at the time might fairly expect bankruptcy would follow.' It should be observed that the presumption referred to in the section is a presumption that the transfer, etc., was made in contemplation of insolvency. This pre- sumption is not displaced by merely showing that the sale or transfer was bond fide or that the creditor did not know or had not probable cause for believing the insolvent was unable to meet his engagements : Evans V. Ross (1879) 30 U. C. C. P. 121. As to the meaning of the words 'in contemplation of insolvency' see Morgan v. Brundrett, 5 B. & Ad. 296, which supports the view that actual insolvency must be expected by the debtor at the time of the trans- action. See also Atkinson v. Brindall, 2 Bing. N. C. 225. ^QQ Gibson v. Brand, 4M.i&G.179; Ex p. Slmson, DeG. 9. If circumstances from which an ordinary man would conclude that a debtor was unable to meet his liabilities, knowledge of insolvency may be presumed: National Bank of Australasia v. Morris [1892] A. C. 2S7. As to the moaning of pledge see Canadian Bank of Commerce v. Smith (1911) 17 W. L. R. 135. See furtlier as to unjust preference Smyth v. Mor- ton, 30 C. P. 5G6. See also City Bank v. Smyth, 20 C. P. 9'S;McWhirter v. Thome, 19 C. P. 302; Churcher v. Cousins, 29 U. C. R. 540; Newton v. Ontario flank, 13 Gr. 652; Campbell v. Barrie, 31 U. C. R. 279, at p. 291 ; T.arur V. Dalian (1915) 48 Que. S. C. 374. Tlie Master or other officer of the Ooui't lo whom court of its powers are delegjited is not a Court of c()nip('tcnt ;;;;^;j;fi;^^^^^^^ iurisdiction witliin tliis section of tlie Act for the i)ur-' pose of trying the question as to Hie ]iro])rie1\ and value of any transfer of property: 11 arte v. Ontario Express Co.; Mnlsnns Bank Claim (1894) 25 0. K. 247. 844 DOMINION WINDING-UP ACT. Sect. 98. In such a case the liquidator should proceed under s. 34 iviuduient" ^^ ^^^ Wiudiiig-up Acl : Re Sun Lithographing Co., preferences. Farquliar's Claim (1892) 22 0. R. 57. Under the Imperial Act an issue of debentures or debenture stock may bo invalidated as a fraudulent pre- ference : Gaslight Co. v. Terrell, L. R. 10 Eq. 168, but debentures issued bond fide to prevent winding-up were held not to be avoided : Inns of Court Hotel, L. R. 6 Eq. 90. It has also been held by the English Courts that debenture holders are not as such entitled to attack a fraudulent preference on a winding-up on the ground that s. 164 of the Imperial Act is intended for the benefit of the general creditors: Willmot v. London Celluloid Co. (1887) 34 Ch. D. 147. company within thirty days. Restoration of security. Payments by 99. Every payment made within thirty days next before the cominencement of the winding-up nnder this Act by a com- pany unable to meet its engagements in full, to a person know- ing such inability, or having probable cause for believing the same to exist, shall be void, and the amount paid may be recov- ered back by the liquidator by suit or action in any court of competent jurisdiction. 2. If any valuable security is given up in consideration of such payment, such security or the value thereof shall be restored to the creditor upon the return of such payment. R. S., c. 129, s. 72. Compare section 134, Insolvent Act, 1875. The payment must be by the debtor himself: Mc- Whirter v. Thome, 19 C. P. 302. Feaudulent Payments. ''Valuable security" means some property of the debtor which has been given up to him or of which he has had the benefit; some security upon which the creditor, if still the holder of it, would be bound to place a value: Beat fir v. Wenger (1897) 24 A. R. 72. See also R. v. Brady, 26 U. C. R. 13. A pajTnent by an insolvent after attachment against him on account of a draft discounted by defendants for him and dishonored by non-acceptance was recover- able back by the official assignee, though the defendants Fraudulent payments. FRAUDULENT PREFEREXCES. 845 were ignorant of the insolvency when they received Sect. 99. the note from him : Roe v. Royal Canadian Bank (1868) " 19 C. P. 347; followed in Roe v. Bank of British North America (1870) 20 C. P. 351. When a bank sold a stock of goods held by them and agreed to accept in payment cheques of a third party drawn on his deposit account and subsequently accepted, and for which cheques the purchaser gave his acceptance to the third party, it was held that an action would not lie by the liquidators of the bank against a third party to recover back the amount paid on his cheques as he had received no valuable consideration from the bank which he should be ordered to repay: Exchange Bank of Canada v. Stinson (1885) 8 0. R. 667. The bank suspended payment September 15th, 1883; winding-up proceedings were commenced No- vember 23rd ; and an order made December 5th. The defendants C. & S., being depositors in the bank, drew a cheque for $4,000 on November 1st on their deposit account, which was given to D., a debtor of the bank, on notes maturing the following December and Janu- ary. D. gave mortgage security to defendants for the cheque on October 31st. The arrangement was all made about October 5th, although the security was not given until the 31st and the cheque was not presented to the bank until November 23rd, wlien it was accepted as payment of the maturing notes. In an action by the liquidators of the bank against the defendants, to which . D. was not a party, to recover the amount thus paid to defendants after the winding-up proceedings were com- menced, and being an unjust preference, etc. : — Held, that upon the facts there was no payment by the bank to the defendants, and that the transaction therefore was not within the statute, 45 Vict., c. 23, s. 75 (Dom.) : Exchange Bank of Canada v. Counsell (1.888) 8 0. R. 673. Action by the assignee of B. & P. to recover back $190 paid by tbom to defendant within 30 days next before the assignment, they Ix'iiig then unable to meet their engagements in full, ;nul dcroTul.-uit knowing such 84() DOMINION WINDING-UP ACT. Sect. 99. inability or liaving probable cause for believing it to FiTimiuieut t^-'^ist. Plea ou equitable grounds, that before the payiueuts. alleged payment B. & P., being retail merchants, re- quested defendant to lend to them for the purposes of carrying on their business, and he did lend, from time to time, various sums of money upon the express agree- ment that such monies should be repaid to defendant out of the proceeds of the general sales of goods there- after made by B. & P., and that such proceeds should be held by B. & P. upon trust to repay and should be charged with and applied in repaying the defendant the amount lent by him; that at the time of the pay- ments defendant was the creditor of B. & P. to an amount not less than $190 for monies advanced upon the said express agreement, and tlie monies paid to defendant by B. & P. were paid out of, and formed part of, the proceeds of said general sales, and were ap- plied by defendant upon and on account of the money lent to defendant upon the said agreement and not otherwise : — Held, on demurrer, Morrison, J., dissenting, plea good; for that the agreement between B. & P. and defendant gave defendant an equitable claim and mort- gage on their goods which under the proviso to s. 90 of the Insolvent Act, 1869, was a ^'valuable security given up in consideration of such payment, ' ' and which must be restored to defendant before a return of the pay- ment to him could be demanded. Morrison, J., was of opinion that the "valuable security" mentioned in s. 90 must be a security recognized in law which would have preference in the hands of a holder against any creditor, which the creditor when proving could show and describe and value, and capable when so valued of being assigned and delivered to the assignee for the estate, and that defendant's equitable claim here was not such a security: Churcher v. Johnston (1874) 34 U. C. R. 528. See Re Wallis (1874) 29 U. C. R. 313; Re Lamb (1866) 4 P. R. 16. On November 15th, 1887, the day before the suspen- sion of the Central Bank, one D., having sufficient funds to his credit, drew a cheque on it payable to C, FRAUDULENT PREFERENCES. 847 who deposited the same in the Dominion Bank and ob- Sect. 99. tained an advance upon it, and the Dominion Bank claimed upon it in the winding-up proceedings, having presented it for. pajTnent on November 17th, when, however, the Central Bank had suspended pajiaient. On November 23rd, 1887, the Central Bank marked the cheque good, debiting D.'s account, and crediting the Dominion Bank with the amount thereof. Afterwards, however, the liquidators claiming the right to set off certain subsequently accruing liabilities of D. against the cheque, the Dominion Bank withdrew their claim upon it, and the Master in Ordinary disallowed it. Subsequently, and after the first dividend had been paid, C. heard of this and filed a claim on the cheque. The Master, however, held that the time for filing- claims having elapsed, he had a discretion as to allow- ing the claim, and allowed it only subject to the said set off: — Held, that there was no right to set off as claimed, and that the allowance of the claim was ex debito justitiw and not discretionary. The fact of the Central Bank having accepted the cheque, and credited the amount to the Dominion Bank and charged the amount to D., showed conclusively that at that time the Central Bank was not a creditor of D. ; nor did the case come within the meaning of any of the clauses in the Wind- ing-up Act relating to Fraudulent Preferences: Re Central Bank; Cayley's Case (1889) 17 r). R. 122. Where an officer of the company has transferred to the latter, in breach of trust, trust moneys which being subsequently used in the company's business are no longer capable of .being ear marked and followed by the cesUtis que trust, so that the company becomes merely a debtor to the trust estate for the moneys, the withdrawal and payment of the moneys to the trustee for tlic protection of the cestuis que trust on the eve of a winding-u}) is a payment to creditors and void under s. 99: Trusts and Guarantee v. Munro (1909) 19 0. L. R. 480. The view of the debtor in making the payment is immaterial, ihid. 848 DOMINION WINDING-UP ACT. Sect. 99. The repayiiieiii by a company on the eve of insol- veney of advances made and which have benefited its creditors is not a preferential payment: Larue v. Dohan (1915) 48 Que. S. C. 375. Debts of 100. When a debt due or owmg by the company has been I'oinpauy transrcrred within the time and under the circumstances in U)"ou?tr5bu- tlie hast preceding section mentioned, or at any time after- tories or wards, to a contributory, or to any person indebted or hable in ^''d^bteil to ^^^y ^^^y ^° ^^^^ company, who knows or has probable cause for the^company- believing the company to be unable to meet its engagements, or in contemplation of its insolvency under this Act, for the pur- pose of enabling such contributory, or such person so indebted or liable to the company, to set up, by way of compensation or set-off, the debt so transferred, such debt shall not be set up by way of compensation or set-off against the claim upon such contributory or person. R. S., c. 129, s. 73 ; 52 V., c 32, s. 16. Before the amending Act, 52 Vict. (Dom.) c. 32, s. 16, was passed it was held that the prohibition in s. 73 of the former Act against acquiring debts for the pur- pose of set-off was limited to the case of contributories, and that even in the case of a contributory who is also a debtor he may acquire a debt owing to the company and set it off against the debt due by him, for he is not a contributory quoad the debt: Re Central Bank of Canada, Yorke's Case (1888) 15 0. R. 625 (following Ings V. Bank of Prince Edward Island (1884-86) 11 S. C. R. 265. The provisions of the section as amended are now applicable to all persons indebted or liable in any way to the company. Formerly claims acquired after a bank suspended payment but before the presentation of the petition could be set off: Maritime Bank v. Robinson (1866-7) 26 N. B. R. 2'97, but not claims acquired after the pre- sentation of the winding-up petition, ibid. Now, after a bank has suspended payment and its insolvency is notorious, compensation of a debt due to the bank can not be effected by a transfer to the debtor of debts due by the bank to third parties, where such transfer has been made after the suspension and within thirty days prior to the winding-up proceedings: Comynunaute v. Kent (1904) Q. R. 13 S. C. 483. APPEALS. 849 Appeals. Sects. 101. Except in the Northwest Territories, any person dis- satisfied with an order or decision of the court or a single judge Appeals in in any proceeding under this Act may, — ^^^® ° ' (a) if the question to be raised on the appeal involves Future future rights; or, nghts. (b) if the order or decision is likely to affect other eases of Principle, a similar nature in the winding-up proceedings; or, (c) if the amount involved in the appeal exceeds five hun- Amount, dred dollars; by leave of a judge of the court, or by leave of the court or a judge of the court to which the appeal lies, appeal therefrom. R. S., c. 129, s. 74; 5 Geo. V. (1915), c. 21, s. 1. 102. Such appeal shall lie,— Court. (a) in Ontario, to the Court of Appeal for Ontario; Ontario. (6) in Quebec, to the Court of King's Bench; Quebec (c) in Manitoba, to the Court of Appeal for Manitoba ; and other places. (d) in any of the other provinces, or the Yukon Territory, to a Superior Court in banc. R. S., c. 129, s. 74; 7-8 Ed. VII., c. 74. •} 103. In the Northwest Territories, any person dissatisfied Northwest with an order or decision of the court or a single judge, in Territories, any proceeding under this Act maj^, by leave of a judge of the Supreme Court of Canada, appeal therefrom to the Supreme Court of Canada. R. S., c. 129, s. 74. 104. All appeals shall be regulated, as far as possible, Practice, according to the practice in other cases of the court appealed to, but no appeal hereinbefore authorized shall be entertained unless the appellant has, within fourteen days from the render- ing of the order or decision, or within such further time as the court or judge appealed from, or, in the Northwest Territories, a judge of the Supreme Court of Canada, allows, taken proceed- ings therein to perfect his appeal, nor unless, within the said time, he has made a deposit or given sufficient security. Security, according to the practice of the court appealed to, that he will duly prosecute? the said appeal and pay such damages and costs as may be awarded to the respondent. R. S., c. 129, s. 74. 105. If the party appellant does not proceed with his appeal, Di.smissing according to this Act and the rules of practice applicable, the «PPeal. court appealed to, on the application of the respondent, may dismiss the appeal with or without costs. R. S., c. 129, s. 75. 106. An appeal, if the amount involved therein exceeds two .\ppeal to thousand dollars, shall by leave of a judge of the ^"Premf ^.[JJJ.]™^ Court of Canada, lie to that Court from, — Canada. D.O.A. — 54 850 DOMINION WINDING-UP ACT. Sects. 101-106. Appeals. I )isputing validity of windiug-up order. Appeal against w indiiig-up order. .\ppeals — I'locedure. (a) Tlio Court of Appeal in the provinees of Ontario, Mani- toba and British rohinihia (9-10 Ed. VII. c. ()2). (b) the Court of King's Bench in Quebec; or, (c) a superior court in banc, in any of the other provinces, or in the Yukon Territory. R. S., c. 129, s. 76. The right of appeal exists only in cases falling within sec. 101, so no appeal lies from an order refus- ing to set aside an appointment for the examination of an officer of the petitioner: Re Stevenson & Brodie, Ltd. (1911) 18 0. W. R. 163 ; 2 0. W. N. 435. If a winding-up order has not been appealed against, a contributory, or other person not a stranger to the winding-up proceedings, cannot call into ques- tion its validity on any of the proceedings in the wind- ing-up. See Re London Marine Association (1870) L. Er. 8 Eq. 176 ; Re Arthur Average Association (1876) 3 Ch. D. 522; Ih. (1875) 10 Ch. 542; Re Haycock's Policy (1876) 1 Ch. 611, 616, 617; Re Padstow Associa- tion (1882) 20 Ch. D. 137, at p. 145; Strick v. Swansea Tin-Plate Co. (1887) 36 Ch. D. 558; Re Sunderland Building Society (1888) 21 Q. B. D. 349; Overend, Gurney S Co. (1867) 16 L. T. 148. But a stranger to the winding-up may dispute the validity of the order: Re Botvling's Contract (1895) 1 Ch. 663. After a winding-up order has been made and be- come effective the proper way to attack if is by appeal, not by application directed to the judge who made the order to rescind it: Re Equitable Savings Association (1903) 6 0. L. R. 26, 31. A judge has no power to rescind his winding-up order, at all events where he has no additional material before him, and it is not apparent that he was previously misled or that any fact was suppressed, ibid. But see Siche Light Co. v. Fortin, 13 Que. P. R. 235 (S. C.) ; also Pontbriand Co. V. Cosky (1912-3) 14 Que. P. R. 19. Nor has a judge on appeal from the findings of the Official Referee jurisdiction to review the winding-up order: Re Far- mer's Bank of Canada, Lindsay's Case (1916) 28 D. L. R. 328;35 0. L. R. 470. With respect to appeals the procedure is governed by ss. 101-106 inclusive, but the appeals so provided APPEALS. 851 for relate, not to the direct appeal from the Master or Sests Referee before whom the reference is proceeding, but 101-106. to the appeal subsequently to be taken to the Court of Appeal. The first appeal from the Master or Referee who is conducting the reference exists as of right in Ontario, on the general principle that when the Court has delegated to a subordinate tribunal any of its pow- ers, a right of appeal always exists from such tribunal to the Court itself in the Province of Ontario : Markle V. Ross (1889) 13 P. R. 135. The appeal from a local Master is to a single judge of the Supreme Court of Ontario. 'The matters in regard to which an appeal is con- Cases in templated are as to substantial matters of property or may 'bi*^^^^ rights arising in tlie winding-up proceedings — an&i^en. order having been granted and something having arisen affecting the assets and the ^creditors' rights therein,' per Bovd, C, in Re Belding Lumber Co. (1911) 23 0. L. R. 255, at p. 258. The original winding-up order is an order fromioi(a) which an appeal will lie under this section: Re Uuion^y^^^ Fire Insurance Co. (1886) 13 A. R. 268. Such an ap- peal involves future rights, ibid., p. 295 ; Marsden v. Minnekahda Land Co. (1918) 40 D. L. R. 76; though it cannot be said that any sum of money is involved: Cushing v. Cushing (1906) 37 S. C. R. 427. See also Re McGill Chair Co. (1912) 5 D. L. R. 393. Where an order had been made on the petition of the company launched in pursuance of a rosolntioii of the shareholders, and proceedings were pending to annul the resolution as being fraudulent and illegal, the order was quashed and the petition cted to be held in suspense pending the conclusion of tlie litiga- tion: Relaiiger v. Union Ahitibi Miuinq Co. (1917) '^2 D. L. R. 700; 25 Que. K. B. 376. An appeal may be taken from an order refusing to grant a winding-up order: Marsden v. M'ninelalida Land Co. (1918) 40 D. L. R. 76, or from an order by a judge revoking his order for dissolution : Re Equit- able, &c., Association (1903) 6 0. L. R. 26. An ordor granting leave to serve a misfeasance summons ex 852 DOMINION WlNl)lN(!-ri> ACT. Sects, juris is not a niattor affecting- future rights, but is a 101-106. mere niattor of procedure: Brown v. Cadwell (1918) Appeals: 2' W. W. R. 229. Future The ^vor(ls "future rights" should be given a wide '■''''''*'•. interpretation: Re J. McCarthy (B Sons (1916-7) 38 0. L. 11. 3, where Meredith, C. J. C. P., in the Appellate Division, dealing with an appeal involving leave to bring an action under s. 22 stated the following to be 'future rights' suflScient under this section, 'the right of trial by ordinary methods involving future possible trial by jury and future unrestricted rights to appeal to this Court and to the Supreme Court of Canada, and other such like rights of the ordinary liti- gant. ' See also Re Union Insurance Co. (1886) 13 A. R. 268, 295; Re Elliott d Sons, Ltd. (1915-16) 9 0. W. N. 51. 101 (b) Test cases brought by one or more contributories uncip e. ^^ obtain a decision on some question aifecting a group or class furnish an example of the application of this sub-section: cf. Re Monarch Bank of Canada (1913) 32 0. L. R. 207 ; so also an appeal involving the ques- tion of liability on bonus stock, all the company's stock having been so issued: Re McGill Chair Co. (1912) 5 D. L. R. 393. See also Re Baileij Cobalt (1919) 17 0. W. N. 228. 101 (c) In ascertaining the amount involved, which must Amount. gxceed five hundred dollars, interest and costs are not to be included: Dufresne v. Guevremont (1896) 26 S. . C. R. 216; Wiarton Beet Root Sugar Co., Kydd's Case (1905) 6 0. W. R. 590. Where the amount in question, while nominally just beyond five hundred dollars, was very uncertain, as the parties on whom the liability was imposed were said to be financially worthless, except in the case of one whose position was proble- matical, leave was refused: Re McGill Chair Co. {Munro's Case) and Re Mattheiv Guy Carriage and Automobile Co. (1912), 5 D. L. R. 393. See, however, Re J. McCarthy S Sons (1916-7) 38 0. L. R. 3, at p. 6, also Broivn v. Cadwell (1918) 2 W. W. R. 2'29. Other instances of circumstances in which leave to appeal will be granted are as follows : APPEALS. ' 853 Be Central Bank of Canada (1897) 17 P. R. 370. Sects. There certain unclaimed moneys had been erroneously 101-106. paid out of Court to certain parties. Subsequently the other in- Receiver-General claimed the moneys under ss. 40 and ^^^jjjjjf j^ "^^ 11 of the AVinding-up Act (now ss. 44, 45, and 137), granted, and presented a petition to the Court for repayment of such moneys, or in the alternative for leave to ap- peal from the orders directing pajnnent out to the executors. This petition was dismissed on the ground that the petitioner was not entitled to complain even if the moneys had been improperly paid out. The Receiver-General applied for leave to appeal to the Court of Appeal, and it was held that a judge of the High Court had power to grant such leave. An order of the County Court under the Ontario Winding-up Act approving of the sale of the assets is a final order as nothing further remains to be done under it, and therefore it is the subject of appeal : Be D. A. Jones Co. (1891-2) 19 A. R. 63. It has been held tliat an appeal will lie from a ruling of the Master-in-Ordinary as to the proper dis- position of moneys paid into Court by trustees of an estate, being the balance in the hands of liquidators of an insolvent bank after passing their final accounts, and which had been erroneously paid out to the trus- tees: Hogahoom's Case, 19 C. L. T. 66. An order was made by Proudfoot, J., directing the winding-u]) under 45 Vict., c. 23 (Dom.), 1882, of a fire insurance company incorporated by the legislature of Ontario, and against which proceedings had previously been taken under R. S. 0. c. 160, and the * 'Joint Stock Winding Up Act" (Out.). The order appointed the receiver in the former proceedings interim rujuidator, etc., and furthci- referred it to the ^Mastei- to appoint a licpiidator, etc., and to settle the list of contributories; and further provided that certain accounts and int^uir- ies which had been made under the previous proceed- ings, should be incorporated with and used in the wind- ing-up proceedings under the Dominion statutes in so far as they could properly be made a])])licable. Held that this was an oider from which an appeal would lie 854 DOMINION WINDING-UP ACT. Sects. iiiuli'i- s. 78 ot* the Act of 1882; Re Uviou Fire Ins. Co. IQ^-^Q^- (188tJ-7) 13 A. R. 268. Cases in Where the contest is really between solicitors of appeaiTies. Creditors competing" for the carriage of the order, that is not a proper case for apix^llate interference: Re Beldhig Lumber Co. (1911) 23 O. L. R. 255, per Boyd, C. ; so also where there is no question of some import- ance involved nor some doubt of the correctness of the judgment in review leave will not be granted: Re Canadian Shipbuilding Co. (1912) 4 0. W. N. 157; Re Ontario Bank (1917) 12 0. W. N. 245. See also Re Durnford Elk Shoes, Ltd. (1916-17) 11 0. W. N. 105. When an order has been made giving leave to appeal such an order can not be appealed from, as it is not an order from which an appeal will lie. This is on the principle that wherever power is given to a legal authority to grant or refuse leave to appeal the deci- sion of that authority is, from the very nature of the thing, final and conclusive without appeal unless an appeal from it is expresslv given : Re Central Bank of Canada (1897) 17 P. R. ^395. See also Hogaboom's Case (1897) 24 A. R. 470; Re Sarnia Oil Co. (1893) 15 P. R. 347. This rule only applies where there is power to give such leave ; and where no appeal lies the order must be ineffectual and the Appellate Court will, of its own motion, refuse to enter on the appeal : Re J. McCarthy d Sons (1916-7) 38 0. L. R. 3; 32 D. L. R. 441; also Cushing Sulphite Fibre Co. v. dishing (1906) 37 S. C. R. 427. In the McCarthy Case the appeal was subse- quently heard on the merits. Practice. Section 101 was amended in 1915 to the effect that leave may also be given by the Court or a judge of the Court to which the appeal lies. Before the amendment it was held that s. 104 indicated that leave should be obtained from the judge who made the order : Re Beld- ing Lumber Co., Ltd. (1911) 23 0. L. R. 255. See also Re Cushing Sulphite Fibre Co. (1906-8) 38 N. B. R. 581. The exercise of discretion in granting or refusing leave by the judge having charge of the winding-up APPEALS. 855 proceedings may be reviewed on appeal, ibid., but seo Sects. Re Central Bank of Camda (1897) 17 P. R. 395, wliero 101-106. it was held that an order granting leave to appeal is an order from which an appeal does not lie, and therefore no appeal from such an order will be granted. Where an application for leave to appeal to the Court of Appeal from a decision in a matter under the Winding-up Act had been made under s. 74' of R, S. C. 129 (corresponding to s. 101 of c. 144 before the amend- ment) and refused by a judge, a fresh application would not be entertained by another judge. The cases in which successive applications to successive judges have been favored are not pertinent to a case where the right to appeal, upon leave, is sought under a special statute: Re Sarnia Oil Co. (1893) 15 P. R, 347. A winding-up order under 45 Vict. c. 25 (Dom.), winding up a foreign company doing business in On- tario and made by one judge will not be set aside by another. An application for that purpose must be made to the proper Court : In re Lake Superior Copper Co., Ltd., Re Pliimmer (1885) 9 0. R. 277. Where a proposed appeal is from a report of the Master an application for security for costs should be made to that Master and not to the Master-in-Cham- bers: Bailey Cobalt Mines v. Benson (1918) 43 0. L. R. 321. Where notice of appeal to the Court of Appeal has been given without leave it is not necessary to have the notice set aside : Re Sarnia Oil Co. (1893) 15 P. R. 1S2 ; and where the appellant has souglit to proceed witliout leave the case has been struck off the list: Re Canadian Shipbuilding Co. (191 2") 4 0. W. N. 157. The time may be extended even where the applica- Extension tion for extension is made after the fourteen days have^f t>™e- elapsed: Re Monarch Bank (1910) 18 O. W. R. 743; 2 0. W. N. 738; Calu7net Metals, Ltd. v. Eldredge (1914) 15 D. L. R. 4G1, wlicre tlie authorities are collected. A respondent by demanding, or a|)i)lying to increase the amount of, security for costs, ther<'l)y waives his right to object that security was not originally furnishetl in 856 DOMINION WINDING-UP ACT. Sects. time: In re Florida (1896-1901) S B. C. R. 388; In re 101-106. The Oro Fluo Mines, Ltd. (1898-07) 7 B. C. R. 388. The section is also referred to in Re Belding Lumber Co., Ltd. (1911) 23 0. L. R. 255. Appoaito There is an appeal to the Supreme Court of Can- Court of ada, by leave oi a judge thereof, only it the amount in- Lanada. volved exceeds two thousand dollars. In other words, the appeal lies only where monetary questions are under consideration, e.g., the liability of a contribu- tory. So a judgment refusing to set aside a winding- up order does not involve any amount and leave to appeal to the Supreme Court of Canada can not be granted: CusJiing Sulphite Fibre Co. v. Cushing (1906) 37 S. C. R. 427. Where the appeal involves the liability of several contributor ies, the fact that the aggregate amount for which these are sought to be made liable exceeds two thousand dollars will not give the Supreme Court jurisdiction. The appeal must be treated as if proceedings had been separately taken against each: Stephens v. Gerth et al., In re Ontario Express (1895) 24 S. C. R. 716. The jurisdiction is dependent on the amount in- volved in the judgment appealed from and not on the amount demanded in the proceedings on which the judgment was rendered : Re Great Northern Construc- • tion Co. (1916) 53 S. C. R. 128, per Brodeur, J. Thus vhere a contributory by the judgment appealed from had been fixed on the list for an amount sufficient to give jurisdiction, but it was shown that a call of 50 per c:nt. only had been made on contributories and that no further calls were proposed to be made, so that less tlian $2,000 would be demanded from the contributory, J rodeur, J., held that the court had jurisdiction : In re ^lonarch Bank of Canada, Murphy's Case, June 17, K)19 (unreported). In order to obtain leave to appeal under this section, i'; is not enough to show merely that the necessary rmount is in controversy. If no important principle of law, nor the construction of a public act, nor any question of public interest is involved, leave to appeal to the Supreme Court of Canada will not be granted : Riley v. Curtis' s and Harvey (1920) 59 S. C. R. 206. APPEALS. 857 The appeal given by s. 106 must be brought within Sects, sixty days from the signing or entry or pronouncing 101-106. of the judgment appealed from, as provided by s. 69 of within ' the Supreme Court Act, R. S. C. 1906, c. 139; and after ^^^^y ^^y^- the expiration of the sixty days neither the Supreme Court of Canada nor any judge thereof can grant leave to appeal: Re Great Northern Construction Co. (1916) 53 S. C. R. 128. See also Ontario Bankw Chaplin (1892) 20 S. C. R. 152. An action by a beneficiary against a trust company executor of the testator and the trust company's liqui- dator under a winding-up order to recover the pro- ceeds of life insurance policies collected by the executor and which had been bequeathed to the plaintitf, is not subject to the provisions of s. 106 and no leave to ap- peal is necessary: Arnold v. Dominion Trust Co. (1918) 56 S. C. R. 433, Idington and Brodeur, J J., dis- senting. Procedure. 107. Ill all proceedings connected with the company, a Describiog lifjuidato]' shall be described as the liquidator of the (name o^^ l>q"ifl!i<'"i' company), and not by his individual name only. R. S., c. 129, s. 29.. Compare Imperial Companies Act, 1862, s. 94, See Bank of Hochelaga v. Masson (1884) 1 M. L. R. 62. Cf., the notes to s. 34 (a). 108. The proceedings under a winding-up order shall be ,m„iii.„. (.^ carried on as nearly as may be in the same manner as an ordimiry ordinary suit, action or proceeding within tbe jurisdiction of ^" the court. 52 V., c. 32, s. 21. This section indicates that s. 117 is not available foi- llic use of ;i litigant: Re Sovereign Bank of Canada (1915) 34(). L. R. 577. 109. The powers confericd \)\ this Ac( upon the eouri may, i»owers of subject to the appeal in this Act provided for, he e.xercised by <-oiirt oxim- a single iudge thereof; and such powers may be exercised in '".'■''^'J '^'*' " u 1 -ji 1 • X • x- tS CI ion rv-v HiiiKlo judge. cnamix'rs, either during term or in vacation. K. S.. c. 1.^9, s. 77 The effect of these sections is, generally speaking, to ndopt fo)- flif piir])os('s of tlio winding-up tlic ])ro- 858 DOMINION WINDING-UP ACT. Sects, codurc of tlie courts of that province in which the wind- 107-109. ing-up is being conducted. Procedure In some provinces special rules have been passed applicable to a winding-up proceeding. No special rules have been passed in the Province of Ontario. Where the reference has been carried into the Master's office, the Master is, under the terms of the order of reference, invested with all the powers to apply the Act that are conferred upon the Court and is enabled to exercise all those powers which could be exercised by a judge of the Court if the matter were being dealt with directly by him. The proceedings before the Master are substanti- ally analogous to the proceedings in an administration action, subject only to such variation and modification as the general requirements of the case may demand. A corporation is a 'person': R. S. C. 1906 c. 1, s. 34 (No. 20) ; and in Re Toronto Rowing Club (1916) 37 0. L. R. 23 ; 31 D. L. R. 686, an order was made for pro- duction and inspection of all books and documents in the possession or control of a corporation to whom the lands of the insolvent company had been transferred. In the Master's office formal pleadings are not com- monly delivered, but where it appears that advantage would be gained by defining the issue beforehand the Master will direct pleadings to be delivered as in an ordinary action. He may also direct discovery and may order the parties to deliver affidavits upon production as in an ordinary action, and may also direct the exam- ination of parties preliminary to the formal hearing of the matter. In this, as in all other respects, the proce- dure is entirely flexible and within the control of the Master before whom the evidence is conducted, and he may, to the extent which the particular circumstances of the case render it desirable, adopt any or all of the proceedings in the action as may appear conducive to the best results in the particular matter to be deter- mined. He should generally cause the proceedings to be so earried on as to lessen expense and expedite the wind- ing-up. PEOCEDUKE. 859 Where an afi&davit has been filed in opposition to a Sects, petition the deponent may be cross-examined thereon : lO'^^-lO^- Manitoba Commission Co. (1911-12) 22 Man. L. R. 268. Xor has the Master power to set aside conveyances as against strangers to the winding-up. See section 133, infra. The court has no power on a chamber application to determine the validity of instruments held by stran- gers to the companv: Re Maritime Trust Co., Ltd. d Burns (1916) 26 D.'L. R. 442. y 110. After a winding-up order is made the court may, Court subject to an appeal according to the practice of the court in ^^[^^7/" Hke cases, from time to time as to the court may seem meet, by order of reference, refer and delegate, according to the practice and procedure of the court, to any officer of the coiirt any of the powers conferred upon the court by this Act. 52 V., c. 32, s. 20. The Master-in-Chambers or other, subordinate judicial officer has no jurisdiction unless by delegation to make an order in a ^\dnding-up proceeding: Re Sar- nia Oil Co. (1893) 15 P. R. 182. 'The powers to be delegated are confined to those conferred by the Act. The officer is not made the re- cipient of any of the original jurisdiction possessed by the court': Re Cormcall Furniture Co. (1909) 18 0. L. R. per Moss, C.J.O., at p. 103. The power to fix the security to be given by the liquidator may be delegated under tlie section: Shool- bred V. Clark (1890) 17 S. C. R. 265, 272, 279; so also the power to settle the list of contributories : Re Wind- in rf-irp Act and Alberta Loan, (Be, Co. (1917) 32 1). L. R. 795. The delegated official has authority in settling the list to enquire whether sliares in respect of which certificates for paid up stock have been issued have in fact had anytliing i)aid thereon : Re Cormvall Furniture Co. (1919) 18 0. L. R. 101. P>iil ill the absence of fraud the court will not enquire into 1h<' value of the consid- eration taken for the issue of paid-up shares, and the Master accordingly is incomijctcnt to make sucii en- quiry: lie Hess (1894) 23 S. C. R. 644, as explained in Re Cornwall Furniture Co., supra, by Moss, C.J.O., at 8t)l) DOMINION WINDING-Ur ACT. Sect. 110. p. 105, who threw doubt on Be Harris (1905) 5 0. W. R. Order of ^^^^- Howcvoi', soG Rc Jiacoi Lake, Sc, Cement Co., reference. Xatio)>a] Tnisf V. Tr}(sts (C Guarantee (1911) 24 0. L. R. 286. The Master-in-Ordinary or other officer of the court to whom its powers are delegated, is not a court of competent jurisdiction within s. 98, for the purpose of trying' the question of the propriety and value of a transfer of property alleged to be an unjust prefer- ence : Hart v. Ontario Express, Sc., Co., Molson's Bank Claim (1894) 25 0. R. 247. The referee to whom the winding-up is referred, subject to an appeal, is functus officio as to all matters dealt with by his report, and cannot directly or in- directly interfere with any appeal therefrom, e.g., by directing the amendment of a notice of appeal from the report: Re Anglo-American Fire Insurance Co. (No. 1) (1919) 16 0. W. N. 149. For the form of order of reference, see Re Army S Navy Clothing Co. (1902) 3 0. L. R. 37, 38. Section 110 is intra vires of the Dominion Parlia- ment: Re Farmers' Bank of Canada, Lindsay's Case (1916) 28 D. L. R. 328; 35 0. L. R. 470. Service of HI. The coui't shall have the power and jurisdiction to ofTur^sd^c- cause or allow the service of process or proceedings under this tion. Act to be made on persons out of the jurisdiction of the court, in the same manner, and with the like effect, as in ordinary actions or suits within the ordinary jurisdiction of the court. o2 v., c. 32, s. 19. Order of H^. Every order of the court or judge for the payment of court to be money or costs, charges or expenses made under this Act shall judgment ^^ deemed a judgment of the court, and may be enforced against the person or goods and chattels, lands and tenements of the person ordered to pay, in the manner in which judgments or decrees of any superior court obtained in any suit may bind lands or be enforced in the province where the court making the same is situate. 58-59 V., c. 18, s. 1. Ordinary 113. The practice with respect to the discovery -of assets of practice in judgment debtors, from time to time in force in the superior covery avail- courts or in any superior court in the province where any such able. order is made, shall be applicable to and may be availed of in like manner for the discovery of the assets of any person who PROCEDURE. 861 by such order is ordered to pay any money or costs, charges or Sect. 113. expenses. 58-59 V., c. 18, s. 1. 114. Debts due to any person against whom such order for Attachment the payment of money, costs or expenses has been obtained, ^^g^^^^f ^^^^" may, in any province where the attachment and garnishment debts. of debts is allowed by law, be attached and garnisheed in the same manner as debts in such province due to a Judgment debtor mav be attached and garnisheed by a judgment creditor. R. S., c. 129, s. 79. - See Imperial v. Provost (1910) 11 Que. P. E. 150. A garnishee order nisi issued by the Supreme Court of Ontario at the instance of the liquidator of an insol- vent company is no answer to a workman's claim for judgment under the Master and Servant Act, K. S. Sask. 1909, c. 149, for wages earned in Saskatchewan : Henderson v. C. P. R. (1916) 30 D. L. R. 62. 115. In any action, suit, proceeding or contestation under witnesses' this Act, the court may order the issue of a writ of su6po?na attendance^ ad testificandum or of suhpwna duces tecum, commanding the ^^^ ^^^""^ attendance, as a witness, of any person who is within Canada. R. S., c. 129, s. 80. 116. 'I'he court may, at any time before or after it has made Arrest of a winding-up order, upon proof being given that there is reason- j¥^,^?^'^;°J able cause for believing that any contributory or any past or ^J^^-^^^^i*^' present director, manager, officer or employee of the company is and seizure about to quit Canada or otherwise abscond, or to i-emove or oj ^^JJ^jgo^'^s, conceal any of his goods or chattels, for the puriwse of evading aud books. f)ayment of calls, or for avoiding examination in respect of the affjiirs of the company, cause such person to be arrested, and liis l)()ok.s papers, moneys, securities for money, goods and chattels to be seized, and him and them to be safely kept until such tim;> as Die court orders. If. S., c. 129, s. 52. Compare Imperial Companies Act, 1862, s. 118. As to the requirements and form of tlic affidavit ne- cessary to found an order for arrest under tliis section, see Central Bank v. Earle (1889) 28 N. B. R. 173, in wliicli it was held that it must api)ear by the affidavit tliat the suit in question w;is brouglit by the direction of thf! li(inidator, and by order of tlip. (V)nrt under the Windiiig-ui) Act. And see In re Imperial Mercantile Credit Co. (18G7) L. R. 5 Eq. 264, and Cotton Planlation Co. of Natal (1868) W. N. 79. S(V2 DOMINION WINDING-UP ACT Sect. 117. 117. 'I'he court may, after it has made a \viiuliii,L;--up order, ~~ summon before it or before any person named by it, any officer Exnminn- ^^( |]^g company or person known or suspected to have in his tion ot per- . ^ " /. ,1 , , «• i. c \-\ sons having i>ossession any ot the estate or ellects oi the company, or sup- oftVots of po.sed to be indebted to tlie company, or any person whom the or"int\!rm.i- c<-^iii't deems capable of giving information concerning the trade, tion. dealings, estate or effects of the company. E. S., c. 129, s. 81. Cf. Imperial Companies Act, 1862, s. 115; Com- panies (Consolidation) Act, 1908, s. 174. The section 'confers a special power, of an inquisi- torial character, intended to be used by the liquidator for his own guidance in the conduct of the liquidation' : Re Sovereign Bank of Canada (1915) 34 0. L. R. 577, per Boyd, C, at p. 579. It is a proceeding not for the purpose of taking evidence, but of obtaining informa- tion. On this ground creditors were refused, under s. 115 of the Act of 1862, leave to attend at the examina- tion to obtain information for the purpose of establish- ing a claim against the company : In re Norwich Equit- able, Sc., Co. (1884) 27 Ch. D. 515. The application when made by the liquidator is ex parte without affi- davit, but where a contributory desires to put the sec- tion in force he must give notice to the liquidator ; and semble the person summoned to be examined has no locus standi to appeal against the order directing his examination: Re Gold Co. (1879) 12 Ch. D. 77, 82, 83. The issuing of a summons is a matter wholly in the discretion of the court: In re Imperial Continental Water Corporation (1886) 33 Ch. D. 314, 319. Where the order to examine is made at the instance of a contributory, the latter may not take advantage of the section for the purpose of enforcing his own rights against the person examined, and thereby obtain a means of discovery greater than the law affords : In re Imperial Continental Water Corporation (1886) 33 Ch. D. 314. In certain circumstances, however, there may be a defined right of discovery open to a contributory, and in Re Sovereign Bank of Canada, supra, the court on the refusal of the liquidator to enter on the examina- tion proposed by the contesting contributories, and the refusal of the Official Referee to allow the contribu- PROCEDURE. 863 tories to examine certain persons, directed that the Sect. 117. Official Referee should consider the appellant's appli- cation to examine a former general manager of the in- solvent bank in the view that the contributories might have a claim to invoke the aid of s. 117. See also Re Toronto Rowing Club (1916) 37 0. L. R. 23 ; 31 D. L. R. 686. 118. If any person so summoned, after being tendered a person reasonable sum for his expenses, refuses, without a lawful summoned excuse, to attend at the time appointed, the court may cause ^ttend"^ such person to be apprehended and brought up for examination. R. S., c. 129, s. 81. Cf. Imperial Companies (Consolidation) Act, 1908, s. 174 (4). 119. The court may require any such officer or person to Production produce before the court, any book, paper, deed, writing or other ^^^ papers, document in his custody or power relating to the company. R. S., c. 129, s. 81. Cf. Imperial Companies (Consolidation) Act, 1908, s. 174 (3). See Re Toronto Rowing Club (1916) 37 0. L. R. 23; 31 D. L. R. 686. 120. If any person claims any lien on papers, deeds, writings Lien on or documents produced by him, such production shall be with- documents. out prejudice to such lien, and the court shall have jurisdiction in the winding-up to determine all questions relating to such lien. R. S., c. 129, s. 81. Cf. Imperial Companies Act, 1862, s. 115; Consoli- dation Act, 1908, s. 174 (3). Production of documents ' without prejudice ' to the lien does not, where the same is a 'jjassive' lien, in any wise affect it so as to entitle the claimant to prior- ity over the claims of other creditors: Executors and Administrators Trust Co. v. Seaborn (1916) 27 D. L. R. 427. 121. The court or person so named may examine, upon oath, Fy.\!iiiiin!itinn either by word of mouth or upon written intorrogat/)ries, any"" "■'"'• person appoai'ing or brought up in manner aforesaid, concerning the affairs, dealings, estate, or effects of the company, nnd may 864 DOMTXTOX WINDING-Ur ACT. Sect. 121. reduce lo writing the aiiswcis of any siu-li person, and require him to sul)scril)e the sanio. 1\. IS., c. 129, s. 83. Cf. Imperial Companies (Consolidation) Act, 1908, s. 174 (2). Inspection 122. After a winding-up order has been made, the court may and^rvi' ers '^''^'^^ '^^^^^^^ order for the inspection, by the creditors, sharehold- ers, members or contributories of the company, of its books and papers, as the court thinks just. Limitation of 2. Any books and papers in the ])ossession of tlie company inspec ion. ^^^,^^^. ^^ inspected in conformity with the order of the court, but not further or otherwise. R. S., c. 189, s. 54. Compare Imperial Companies Act, 1862, s. 156. The liquidator is entitled to the custody of the books as against a mortgagee. Special circumstances must generally be shewn in order to obtain an order for in- spection: Ex p. Buchanan (1866) 15 W. R. 99; Re Im- perial Land Co. of Marseilles (1882) W. N. 173; Co- lonial Engineering Co. £ Dominion Lif/ltf, Heat S Poiver Co. (1911-2) 13 Que. P. R. 436. Where inspec- tion is sought for some purpose other than that of the winding-up the order will be refused: Re North Bra- zilian Sugar Factories (1888) 37 Ch. D. 83. And see Ex p. Walker (1851) 15 Jur. 853; Lancashire Cotton Spinning Co. v. Creator ex (1866) 14 L. T. 290; Re Emma Silver Mining Co. (1875) L. R. 10 Ch. 194; Re Lisbon Steam Tramways Co. (1875) W. N. 54; Re National Financial Co. (1867) 15 W. R. 499. Officer of 123. When in ilie course of the winding-up of the business company^ of a company under this Act, it appears that any past or present money. director, manager, hquidator, receiver, employee or officer of such company has misapplied or retainer] in his own hands, or become liable or accountable for any moneys of the company, or been guilty of any misfeasance or breachf of trust in relation to the company, the court may, on the apfdieation of any liqui- dator, or of any creditor or contributory of the company, not- witlistanding that the offence is one for which the offender is criminally liable, examine into the conduct of such director, Order com- manager, liquidator, receiver, oflficer or einployee, and, upon pelling re- such examination may make an orrler requiring liim to repay payment. ^j^^, moneys so misapplied or retained, or for which he has be- come liable or accountable, together with interest, at such rate as the court thinks just, or to contribute such sums of moneys to the assets of the company, by way of compensation in respect MISFEASANCE. 865 of such misapplication, retention, misfeasance or breach of Sect. 123. trust, as the court thinks fit. R. S., c. 129, s. 83. The section reproduces s. 165 of the Imperial Com- imperial panics Act, 1862. The corresponding section, 215 (1) section. of the Companies (Consolidation) Act, 1908, is some- what wider in its terms, including 'any person who has taken part in the formation or promotion of the company,' receivers, employees and promoters. The more recent English cases must accordingly be applied with caution as regards the classes of i)('rsons liable under s. 123. The principle of the Winding-up Act is that all claims which are capable of being satisfactorily dealt with in the winding-up should be so disposed of, and a shareholder will not be permitted to bring an action against the directors and officers for misfeasance : Re Farmers' Loan S Savings Co., Ex p. Toogood (1908) 8 0. W. R. 12. If, however, the cause of action against a director is a personal wrong, the right to sue the director persists, and no leave is necessary under s. 22, for the assets of the company would not be benefited or affected by the result of the litigation, ibid. The section creates no new right, its effect being Etfect of merely to provide a summary procedure for enforcing section. against an officer of the company liability for breach of trust or other misconduct, which prior to the Act might have been enforced by action: Irish Provident Assurance Co., Ltd. (1913) 1 Ir. 352. 'The misfeasance section ... is one which does not create liability but relates to procedure alone. . . . The liability must be found outside the section: Re Oiven Sound Lumber Co. (1915) 34 0. L. R. 528, per Middleton, J. The summary procedure is in addition to other rights of action and if the liquidator prefers to obtain leave and bring an action he may do so: Northern Trust v. Bntchart (1917) 35 D. L. R. 169. The Master has jurisdiction under the order of dele- Master's gation to deal with questions of misfeasance: Re i?f)/;/Jiiris'iiction. rt; Iron Co., Livingstone's Case (1887-9) 14 O. K. 211, n.c.A. — 55 866 DOMINION WINDING-UP ACT. Sect. 123. nffiniuHl (1889) 16 A. R. 397; Re Owen Sound Lumber Co. (1916-17) 38 O. L. R. 414, 420. Misfeasance. Misfeasaiice iiiis becii deliiiod so as to include a breach of duty by an officer the direct consequence of which has been a misapplication of its assets resulting in pecuniary loss to the company for which he could be made responsible by an action at law or in equity : In re KiuQstou Cotton m)u Co. (No. 2) (1896) 2 Ch. 279, 283. And see Coventry S Dixon's Case (1880) 14 Ch. D. 660; Cavendish Bentick v. Fenn (1887) 12 App. Cas. 652. Under the section three questions are involved: (1) Has the person sought to be charged been guilty in relation to the company of one or more of the acts specified in the section? (2) If so, has loss resulted to the company or its assets for which compensation ought to be directed to be made? and (3) what is the extent of the compensation which ought to be directed? : In re Manes Tailoring Co., Crawford's Case (1909) 18 0. L. R. 572, per Moss, C.J.O., at p. 580. Pecuniary In ordcr to bring a case within the section, it must I-om a^'n^-^^ '^^ shown that pecuniary loss to the company resulted from the act or default complained of : In re New Ma- shonaland Co. (1892) 3 Ch. 577 -, Irish Provident Insur- ance Co., Ltd. (1913) 1 Ir. 352. Loss to the company is an essential ingredient of the offence : Re Dominion Trust Co. {Directors' Case) (1917) 32 D. L. R. 63; Re Stetvart, Howe S Meek (1913) 9 D. L. R. 484. A director may be liable even though he may only liave been guiltv of a mistake of law and not of any moral wrongdoing: In re Manes Tailoring Co., Ltd. (1909) 18 0. L. R. 572. It has been held, however, that 1 bona fide transaction with the company impracticable only on the ground of idtra vires will be set aside only subject to the terms that both parties are restored to their original rights: Irish Provident Insurance Co., Ltd. (1913) 1 Ir. 352. If the act of misfeasance is neither idtra vires nor fraudulent, nor dishonest, it must be shown that the directors did not really exer- cise their discretion or judgment as such: In re Ma- shonaland Co. (1892) 3 Ch. 577. Directors who have MISFEASANCE. . 867 taken no active part in the management of the com- Sect. 123. pany's business, who have attended no meetings and are not cognizant of any of the acts or omissions of the board are not liable: Re Dominion Trust Co. {Direc- tors' Case) (1917) 32 D. L. R. 63. The duties and responsibilities of directors have been considered generally under s. 80 of the Companies Act, which see. See also for liability in respect of improper dividends, ss. 70 and 82 of the Companies Act; in respect of permitting the transfer of unpaid shares, s. 83,. and unauthorized remuneration of direc- tors, s. 80 of the Companies Act. Directors who knowingly or without the exercise Dividends. of ordinary prudence, sanction the payment of a divi- dend in diminution of capital are jointly and severally lial)le: Xorthern Trust Co. v. Butchart "(1917) 35 D. L. R. 169; but negligence must be so gross as to amount to a breach of trust: ibid. p. 183. Where, however, direc- tors in declaring dividends in diminution of capital have acted honestly and have not been guilty of wilful blindness or carelessness, they have been excused: Re Owen Sound Limtber Co. (1916-17) 38 O. L. R. 414. Where directors have no power to authorize pay- Commissious. ment of commissions out of the company's funds to persons who have procured subscriptions for the company's shares, they are liable on a misfeasance, summons to repay to the liquidator the sums so im- properly expended under their authority: Re Monarch Bank of Canada (1910) 22 O. L. R. 516; so also where the directors knowingly or witliout the exercise of or- dinary prudence, sanction an illegal remuneration ol' directors or any ultra vires or illegal i)ayments: Northern Trust Co. v. Butchart (1917) 35 I). L* R. 169. Moneys taken by directors in jjayment of services ii,.„u,„erii- where such payment is not authorized are taken in^'"'"- breacli of trust and are recoverable: Re BoJf S Iron Co., Livinrjstone's Case (1887-9)14 0. R. 211, affirmed (1889) 16 A. R. 397. Likewise a connnission on slini-cs subscribed for in the mcniorandnni of association by llic director in <|nestion wiicre tiie connnission was not an thorized bv the articles or rcForrod to in the prosi)ec) 11 D. L. K. 252. In Be Owen Sound Lumber Co. (HJlG-7) 38 O. L. K. 414, a director was held liable to refund moneys [)aid to him for guaranteeing the company's indebted- ness in pursuance of a resolution of the directors in- valid for lack of confirmation by the shareholders. Where directors of a company had obtained money on the representation that the funds would be invested on mortgage, whereas they were in fact used to dis- charge pressing claims of the company's creditors, all the directors who stood by in circumstances which should have aroused their suspicions were held person- ally liable on a misfeasance summons for the amount so misapplied, the sum being directed to be paid to the liquidator for repayment to the person defrauded : Re Traders' Trust Co. £ Kory (1916) 26 D. L. R. 41. Promoters. Where promoters by reason of being officers of the company are within the section their liability for un- disclosed profits may be enforced by misfeasance sum- mons; cf. Leeds S Eanley Theatres of Varieties {l^^l) 2 Ch. 809, and see the note on Promoters at pp. 204 ff., supra. A director who had joined in sanctioning the issue to himself of shares as paid-up wdiich were, in fact, not fully paid and had transferred his shares, receiving $125 more than he had paid, and the shares were subsequently forfeited for non-payment of calls, was held liable for breach of trust in assuming to accept the shares as paid-up, but the measure of dam- ages w^as held to be the market value of the shares at the date of allotment. The shares not then being of any market value, his profit, the sum of $125, was the extent of his liability: In re Manes Tailoring Co., Ltd. (1909) 18 0. L. R. 572. The same rule was applied where a promoter had distributed among directors a portion of a block of shares issued to him as fully paid but wdthout consideration on a sale by him to the com- pany, and the value of the shares being shown to be nil the directors, though liable as contributories on any shares in their hands, w^ere held not liable under the MISFEASANCE. 869 section where they had sold their shares under circnm- Sect. 123. stances not involving a violation of duty: Re Owen ~ Sound Lumber Co. (1916-7) 38 0. L. E. 414. In the latter instance the directors would remain liable: Re Peterborough Cold Storage (1907) 14 0. L. E. 475. Where directors adopt a system of doing business which disregards a provision of the governing statute, e.g., a requirement that corporate and trust moneys are to be kept separate, that is prima facie a defective and negligent system and if loss can be shown to have resulted therefrom they will be guilty of misfeasance : Re Dominion Trust Co. {Directors' Case) (1917) 32 D. L. R. 63, 65. Neglect or omission to attend meetings is not the No liability, same as neglect or omission of a duty which ought to be performed thereat: Marquis of Rute's Case (1892) 2 Ch. 100. Merely voting in favor of a resolution autho- rizing payment to a co-director which fails to have any binding effect because not confirmed bv the share- holders, is not misfeasance: Re Owen Sound Lumber Co. (1916-7) 38 0. L. R. 414. Where an illegal pay- ment of money has been autliorized by an ultra vires resolution mere concurrence in the resolution is not sufficient to impose liability where the director has not taken part in the payment: Cidlerne v. London, (&c., Permanent Ruilding Society (1890) 25 Q. B. J). 485; • Young v. Naval, &c., Society (1905) 1 K. B. 687, and see Re Monarch Rank of Canada (1910) 22 0. L. R. 516. Acceptance of paid-up shares of a company for i)re- incorporation services where the memorandum of association authorized the issue, though the prospectus in effect stated tiiat tlie power to make such issue would not be exercised, and there was no claim of frnud as to the rendering or value of tlie services and no allegation of loss to the company, was licld not to be misfeasance: Re Canadian Diamond Co. (1913) 11 D. L. R. 252. Acting as a director witiiout (j[ualilicatioii is not misfeasance, no loss being shown: Coventry di Dixon's Case (1880) 14 Ch. D. 660. 870 DOMINION WINDING-UP ACT. Who are liable. Sect. 123, It is not necessary that a director to be liable under the section bo validly appointed; dc facto directors will bo liable: Covcntri/\{} Dixon's Case (1880) 14 Ch. D. ()G0; Owen Sound Lnwher Co. (1916-07) 38 0. L. R. 414; Northern Trust Co. v. Butchart (1917) 35 D. L. R. 169, 180. Provisional directors are covered by the sec- tion: Re Monarch Bank of Canada (1910) 22 0. L. R. 516, but not a trustee for bondholders: Astley v. New Tivoll (1899-) 1 Ch. 151, 154 (per North, J.); nor the company's solicitors: Carter's Case (1886) 31 Ch. D. 496. Set-off. There is no right of set-off against a claim made by the liquidator: Ex p. Pelly (1882) 21 Ch. D. 492; Re Bolt and Iron Co., Livingstone's Case (1887-9) 14 O. R. 21, affirmed (1889) 16 A. R. 397. Limitation. As to tlio Operation of the Statute of Limitations, see Flitcroft's Case (1882) 21 Ch. D. 519; Masonic, dtc, Co. V. Sharpe (1892) 1 Ch. 154; National, dc, Co. (1902) 2 Ch. 34; North American Land, dc, Co. v. Watkins (1904) 1 Ch. 242, affirmed (1904) 2 Ch. 233. In National Bank of Wales (1899) 2 Ch. 629 the rate allowed was five per cent.,, though the director eventually escaped liability in the House of Lords. The application, which may be made by any liciui- dator, creditor or contributory is ex parte when made by the liquidator, and on notice to the liquidator if made by a creditor or contributory. Semhle., if the application is by a contributory he must have a direct pecuniary interest in the success of the application : Cavendish Bentick v. Fenn (1887) 12 App. Cas. 652. The procedure authorized by the section is an indepen- dent and principal one and cannot be taken incidentally by the liquidator counterclaiming for damages against a director by way of contestation of the latter 's claim against the company as a creditor : Re Boston Shoe Co. (1914) 16D. L. R. 856. Costs. If the liquidator i.y unsuccessful the costs are usu- ally given out of the estate, but the liquidator may be compelled by the order to pay the costs out of his own Interest. Procedure. MISFEASANCE. 871 pocket: In re W. Powell S Sons (1896) 1 Cli. 681. Sect. 123 . Costs ma}^ be imposed against the defendants even though they succeed in showing that their misconduct has caused the company no pecuniary loss so that the liquidator's claim fails: In re David Ireland S Co. (1905) 1 Ir. 133. 124. The court may, by any order made after the winding- Dispensing up order and the appointment of a liquidator, dispense with "'^'^'^ notice, notice to creditors, contributories, .shareholders or members of the company required by this Act, where in its discretion such notice may properly be dispensed with. 52 V., c. 32, s. 11. 125. The courts of the various provinces, and the judges Courts and of the said courts respectively, shall be auxiliary to one another j,^^,'^?f^^y_ -for the purposes of this Act; and the winding-up of the business Transfer" of the company or any matter or proceeding relating thereto from one may be transferred from one court to another with the concur- Jjnother? rence, or by the order or orders of the two courts, or by an order of the Supreme Court of Canada. R. S., c. 129, s. 84. The Court which has made the winding-up order is a Dominion Court ad hoc and can restrain by injunc- tion proceedings against the liquidator in the Courts of other provinces: Baxter v. Central Bank (1891) 20 0. R. 214. Generally speaking a ])rovincial Court should not act except at the request of the Dominion Court, but if requested should in every way assist such Court: Motvat v. Dominion Trust Co. (1914-15) 8 Sask. L. R. 404. As to transfer of a proceeding from one Court to another, see Steiuart v. Lepage (1916) 53 S. C. R. 337, 349. The section does not authorize the Courts of one province to entertain an application for leave to pro- ceed with an action there commenced after a winding- up order lias been made in another province. The ap- plicatioji should be made in the winding-up proceed- ings to tlie Court which made the order : Breivster y. Canada Iron (1914^5) 7 0. W. N. 128. Sec also Re Dominion Cold Storaffc Co. (lSi)8) 18 V. R. 68. Dn Mil ai)i)lication in Saskatchewan for leave to pro- ceed tiierc against the defendant company and its liquidators for an order requiring tlic latter to account for property in their hands locally situate in Saskat- chewan, the Court in P>ritish Columbia having made S72 DOMINION WINDING-UP ACT. Sect. 125. the wincling--iip order, it was held that the provincial Court shoiikl not intervene except on the ground of emergency which Avas not made out on tlie application : 'loicat y.'Dom'Diiou Trust Co. (191-4-15) 8 Sask. L. R. 404. ("onitsand Before an action against the company was com- CKiHrv nienced in Alberta a winding-up order had been made by the Supreme Court of British Columbia where the company was domiciled. It was held in view of s. 22 that the Courts of other provinces could not exercise (he jurisdiction which they would otherwise possess without leave of the Court administering the provi- sions of the Act ; but the proceedings taken were only irregular, and not void, and the Alberta Court would act as ancillary to the British Columbia Court should tlie latter desire the action to proceed. The action was stayed in the meantime: Blais v. Bankers' Trust Cor- poration (1913) 25 W. L. R. 653. See also Stewart v. Lepage (1916) 53 S. C. R. 337. As to the extra-territorial jurisdiction of the Court of a province under the Winding-up Act see Henderson V. C. P. K (1916) 30 D. L. R. 62. Order of one 126. When an order made by one court is required to be en- court may forced by another court, an office copy of the order so made, hy Snother^ certified l)y the clerk or other proper officer of the court which made the same, under the seal of sudi court, shall be produced to the proper officer of the court required to enforce the same. R. S., s. 129, s. 85. I'mretHliMK 127. Such last mentioned court shall, upon such production on order of of the said certified copy of such order, take the same proceedings I'ourt^'' thereon for enforcing the order as if it was the order of the court required to enforce it. R. S., c. 129, s. 85. The practice in Ontario is that on production of an office copy of the order certified as required by s. 126 execution may be issued on the order of the Court of another province without making such order a rule of Court or obtaining the direction of a judge: Re Do- minion Cold Storage Co., Lower ey's Case (1898) 18 P. R. 68. In New Brunswick the practice is on production of the order to the Registrar to enter the order as a judg- PROCEEDING OX ORDER OF ANOTHER COURT. 873 ment of the Court under the rules made under the Act Sect. 127. by the New Brunswick Court in Trinity Term, 1888, without any formal motion to that effect: Be Sove- reign Bank (1915) 43 X. B. R. 519. 128. The rules of procedure, for the time being, as to Rules as to amendments of pleadings and proceedings in the court, shall amendments, apply, as far as practicable, to all pleadings and proceedings under this Act. 2. Any court before which such proceedings are being carried Authority to on shall have full power and authority to apply to such pro- "'*p ^• ceedings the appropriate rules of such court as to amendments. R. S., c. 129, s. 86. 129. No pleading or proceeding shall be void by reason of irregularity any irregularity or default which may be amended or disre- "i" default, garded; but the same may be dealt with according to the rules and practice of the court in cases of irregularit}' or default. R. S., c. 129, s. 87. See the notes to s. 108. As to amending the winding-up petition see the notes to s. 12. Where the liquidator incorrectly has brought an action in his own name, instead of in that of the company, leave may be given to amend. See Kent V. Communaute (1903) A. C. 220. 130. Any powers bv this Act conferred on the court are powers con- in addition 'to, and not in restriction of any other powers at Jerred^by^^^ law or in equity of instituting proceedings against any contn- g/,jyen,en. butory, or the estate of any contributory, or against any debtor tary. ol" the company, or his estate, for the recovery of any call or other sum due from such contributory, debtor, or estate; and such proceedings may be instituted accordingly. R. S., c. 129. s. 90. 131. The court may, as to all matters relating to the wind- Wishes of ing-np, have regard, so far as it deems just, to the wishes of creditors, the creditors, contributories, sharoboldors or members, as proved to it by any sufficient evidence. K. S., c. 120, s. 10. 131 \ The court if satisfied that, with vosppct lu tlic whole Solicitors or nnv portion of the proceedings, the interests of creditors, j;;;;^.;;-';;^-^«l^ claimants or shareholders can be classified, may, after notice (.i„j,scs of by advertisement or otherwise, nominate and appoint a solicitor creditors, and counsel to represent each or any class for the purpose of the proceedings, and all the persons composing any such class shall be bound bv tbo ads of the solicitor and counsel so appointed, 874 DOMINION WINDING-UP ACT. Sect. 131a. ;iiid service upon such solicitor of notices, orders, or other pro ceedings of wliich service is required, shall for all purposes be, and be deemed to be, good and sufficient service thereof upon all the persons composino; tjio class represented by liim; and the court may, by the order appointing a solicitor and counsel for any class, or by subsequent order, provide for the payment of the costs of such solicitor and counsel by the litjuidator of the com- pany out of the assets of the company, or out of such portion thereof as to the court seems Just aiul proper. 6-7 Ed. VII. (1907), c. 51,. No meeting is required under this section : Re Lon- don Fence, Ltd. {No. 1) (1911) 21 Man. 91. Liquidator 132. 'I'he liquidator shall be subject to the summary juris- siibject to diction of the- court in the same nianner and to the same extent jiiriscHction ^^ ^^^ Ordinary officers of the court are subject to its jurisdic- of court tion ; and the performance of his duties may be compelled by order of the court. K. S., c. 129, s. 30. See the notes to s. 33. Remedies 133. All remedies sought or demanded for enforcing any obtained claim for a debt, privilege, mortgage, lien or right of property order '""'^''^ upon, in or to any effects or property in the hands, possession or custody of a liquidator, may be obtained by an order of the court on summary petition, and not by any action, suit, attach- ment, seizure or other proceeding of any kind whatsoever. R. S., c. 129, s. 39. Compare Insolvent Act, 1869, s. 50; Insolvent Act, 1875, s. 125. The section lays down the general rule that the liquidator and the estate are to be protected from vexa- tious litigation and that claims against the estate must in general be disposed of in the winding-up and not otherwise. See Re J. McCarthy S Sons (1916-7) 38 0. L. R. 3 ; 32 D. L. R. 441 ; Re Ontario Bank (1916-17) 38 0. L. R. 242. Who are The words 'all remedies sought, etc.,' apply to affected. creditors who have proved or can prove: Archibald v. Ealdon, 30 U. C. Q. B. 30, 36. Nor need the claimant be a creditor in the strict sense ; proceedings by cestuis que trust are covered by the section: Stewart v. Lepage (1916) 53 S. C. R. 337, Davies, J., dissenting; but the section does not apply to a creditor who is not seeking EEMEDIES OBTAINED BY SUMMARY ORDER. 875 to enforce his claim, e.g., a mortgagee who prefers to Sect. 133. stand outside the liquidation : Re Kurtz & McLean, Ltd. (1908) 11 0. W. R. 437, 439. It was held, however, under s. 50 of the Insolvent Act, 1869, that where a mortgagee desired to obtain possession of assets in the hands of the liquidator he must proceed by summary application: Cromhie v. Jackson, 34 U. C. Q. B. 575. A lienholder may obtain leave to pursue his remedies b}^ application under this section: Good v. Nepisiguit Lumber Co. (1911-13) 41 N. B. R. 57, 74. A suit can not be entered against the liquidator Effect of without leave of the Court: Robillard v. Blanchet '''^^^°^' (1901) Q. R. 19 S. C. 383. Where a trust company is in process of liquidation under order of the Court in one province this section and section 22 will prevent a suit being brought in another province to have the liquida- tor declared a trustee of moneys deposited with the company for investment and for his removal and the substitution of a new trustee and the vesting in the latter of the securities representing the moneys de- posited: Steivart v. Lepage (191 G) 53 S. C. R. 337. The proper procedure in such a case is an application by summary petition, ibid., per Idington and Anglin, JJ. So also where the plaintiff claimed the right to sue the liquidator for the price of goods alleged to have been taken and sold by the latter, whereby the plaintiff was deprived of his right of stoppage in transitu, it was held that an action having been begun without leave was barred by s. 133 : //. J. Carson S Co. v. Hie Mont- real Trust Co. (1915) 49 N. S. R. 50. Where, however, til*' i)laiiitifrs, trustees for bondholders, had obtained leave to bring an action against tlie defendants, TKiui- dators of tiie mortgagor com)»aiiy, in resjx'cl of assets alk'ged to be mortgaged under the trust (k'ed, claiming (1 ) the i)roceeds, or (2) damages for conversion, it \v,-is held that the langnage of s. 133 was not ;i])pru';il)l(' to the fii'st claim and that its ;ipprK^al)ility to llir second was doubt fnl: lie liarcu Lake Portland Cement Co., National Trust v. Trusts and Cuaraiilcc (1011 ) 24 ( ). L. R. 286. As regards land mortgages it has been held tli;it the section is applicable to tlie case of a single sive 87(i DOMINION WINDING-UP ACT. Sect. 133. morti^-ag-o only, and not where there are subsequent s„„„„ary~" mortgages: Be Canada Cabinet Co. (1907) 9 0. W. E. Special circumstances and very substantial reasons are required to justify the granting of leave under s. 22 and if such leave has been granted on a wrong principle the plaintiff may be remitted by the Appellate Court to his rights under s. 133 : Re J. McCarthy S Sons (1916-7) 38 0. L. R. 3; 32 D. L. R. 441. Is the rem- It luis been held by the Ontario Court of Appeal edy exciu- ^^^^ ^j^^ remedy by way of summary petition given by s. 133 is not exclusive; that s. 133 must be read mth s. 22, the former section laying down the general rule, the latter (providing for leave to bring actions) giving the exception; that s. 22 is to be followed only where there are no exceptional circumstances ; that s. 133 only applies to cases reasonably within its language. It was pointed out that some matters are beyond the jurisdic- tion of the Master or Referee in a winding-up pro- ceeding, e.g., he can not make a vendor account for a profit which has accrued to him: In re Hess (1895) 23 S. C. R. 644, 665, 666, and he is not a court of competent jurisdiction within the meaning of s. 98 to try the question of a transfer alleged to be an unjust prefer- ence: Hart V. Ontario Express (1898) 25 0. R. 247. It was held that if the Referee had jurisdiction to adjudicate on the claims in the winding-up, he liad a discretion under s. 22 to give leave to bring an action and that it could not be said that the discretion had been improperly exercised: Re Raven Lake Portland Cement Co., National Trust v. Trusts afid Guarantee (1911) 24 0. L. R. 286. So also in Kurtz & McLean, Ltd. (1908) 11 0. W. R. 437, where in addition to the claims of the applicant (an unpaid vendor) and the liquidator, a mortgagee claimed an interest in the assets in question, Mulock, C.J.K.B., ordered that if the mortgagee was willing to attorn to the jurisdiction (which he could not be com- pelled to do) then the rights of the three parties should be disposed of under the Act, but that otherwise the applicant should be entitled to bring an action. REMEDIES OBTAINED BY SUMMARY ORDER. 877 On the other hand in Nova Scotia in a case heard Sect. 133. before the full Court it. was said that, apart from the prohibition of s. 133 against proceeding by action, where the section applies the remedy is exclusive, the general rule being that where a new statutory remedy is provided it is the exclusive remedy : H. J. Carson <& Co. V. The Montreal Trust Company (1915) 49 N. S. R. 50. In Steivart v. Lepage (1916) 53 S. C. R. 337, Aiiglin, J., at p. 348, regarded the petition under s. 133 as the exclusive means of obtaining relief so far as the claimants sought a declaration of trust and allocation to the trust of assets in the hands of the liquidator. Idington, J., stated at p. 345 that if the claim was not of a clear and undoubted character the Court might permit some more suitable remedy. Brodeur, J., was apparently of the opinion that if leave had been obtained the action might have been brought. Dutf, J., gave no reasons. Davies, J., dissented. It may be pointed out that both of the last mentioned cases were instances of actions brought without leave ; but in H. J. Carson & Co. v. The Montreal Trust Co. the Court held in effect that s. 133, which prohibited actions against the liquidator, and not s. 22, which prohibited actions against the company, governed. The judgment of Anglin, J., in Steivart v. Lepage looks in the same direction. The question whether the remedy under s. 133 is exclusive was recently considered by the Court of ApiK*al in British Columbia in Michigan Trust Co. v. Canadian Puget Hound Lumber Co. (1918) 3 W. W. R. 273. Tlie phiintiff trustee for bondholders under a mortgage trust deed was held entitled to a final order of foreclosure, leave to bring tlie action hax'ing been given. Macdonald, C.J. A., held that the contention that the remedy under s. 133 was exclusive could onlv prevail, if at all, when the case falls strictly within the class of cases mentioned in the section; and that the case did iint f.-ill williin the section because the mort- gaged premises were never "in the hands, i)ossession or control of tho liquidator." McPhillips, J. A., held that Steivart v. L())ag(' sliouhi not be interpreted as 878 DOMINION WINDING-UP ACT. Sect. 133. loldiiig that, even wliere leave has been granted, such ^nu action is not maintaina1)h\ (lalliher, J. A., con- curred in upholding the right of action. Rules, Regulations and Forms. Judges 134. A majority of the judges of the court, of which the may'' niiike. chief justice sJiall be one, may, from time to time make and frame and settk^ the foi'ms, rules and regulations to be followed and observed in proceedings under this Act, and make rules as to tlie costs, fees and charges which shall or may be had, taken or paid in all such cases iiy 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, or for any service performed or work done under this Act: Provided that in Proviso Ontario the judges of the Supreme Court of Ontario, and in Quebec, the judges of the Court of King's Bench, or a nuijority of such judges of which the chief justice shall be one, shall make and settle such forms, rules and regulations. R. S., c. 129, s. 92, as amended by 6 & 7 Geo,. V. (1916), c. 5, s. 2. I'ntil rules 135. Until such forms, rules and regulations are made, the are made, various forms and procedures, including the tariff of costs, fees court to*^^ ° and charges in cases under this Act, shall, \nilcss otherwise apply. specially provided, be the same as nearly as may be as those of the court in other cases. R. S., c. 129, s. 93. Until rules are made under s. 134 the general rules of practice in force in the Court administering the Act are incorporated by reference in s. 135: Re Belding Lumber Co. (1911) 23 0. L. R. 255. Section 135 read with s. 2 (e) and s. 134 renders applicable in Ontario the procedure, including therein the rules and methods of practice current in the Supreme Court of Ontario .vhich are to be adapted as nearly as may be to the uses )i the profession under the Winding-up Act : Re Baynes Carriage Co. (1912) 7 D. L. R. 257, (1913) 27 0. L. R. 144. So, where the practice of the Court is to support petitions by affidavits and viva voce evidence share- lolders petitioning for a winding-up were held entitled lo examine the company's directors as witnesses in .support of the petition, ibid. As regards sales the ordinary practice of the Court will apply until rules are made under s. 134 : Re Bolt d /row Co. (1885) 10 P. R. 437. UNCLAIMED DEPOSITS. 879 ■Unclaimed Deposits. Sect. 136. 136. All dividends deposited in a bank and remaining un- unclaimed c-laimed at the time of the final winding-up of the business of dividends to the company shall be left for three years in the bank where they Sk!"" '° are deposited, subject to the claim of the persons entitled thereto. 2. If such dividends are unclaimed at the expiration of ^^''^^^ ^^j'^i^^l^j.'^ *^° years aforesaid they shall be paid over by such bank, with aftcr%hree interest accrued thereon, to the Minister. years. 3. If such dividends are afterwards duly claimed they shall, If after- with such interest, be paid over to the persons entitled thereto. Jj^'i'med R. S., c. 129, s. 94. When the liquidators had passed their final ac- counts and paid into Court the balance in their hands and that balance had by an inadvertence been paid out of Court to parties not entitled to it, it was held that the Receiver-General had such an interest in the fund that he might even before three years from the time of payment in had expired apply to the Court for an order for repayment into Court of the fund: Eoga- boom's Case (1897) 24 A. R. 470; 28 S. C. R. 192. Where a company had been struck off the register and dissolved under s. 24 of the Alberta Companies Ordinance it was held by the Alberta Supreme Court, Appellate Division, that the shareholders had a rigiil to bring in their own name a representative action to recover assets belonging to the company, and that these assets did not vest in the Crown as bona vacantia: Embrer v. Millar (1917) 38 D. L. R. 331. 137. 'I'he money deposited in the bank by the liquidator M„„,.y after the final winding-up of tbe i)usiness of a company sball jl('P"^-^j>.'jj' 1)0 left for three years in tbe hank, subject to be claimed by j^jj^j. ti„.pe the persons entitled thereto, and if not then paid out to such years lo be per.'ions, shall be then paid over, with tbe interest accrued ^Jr-^^^l^ „f thereon, to the Minister, and if afterwards claimed shall be Finanr-n. paid, with such interest, to tbe persons entitled to tbe same. R. S., c. 129, .s. 41. Offences and Penalties. 138. When a winding-up order is made, if it appears in the Co,„.t „,.,> course of such winding-up that any past or present ^^•'•Pf^^"''- f,;;;"^,,,;;!;!";'; manager, officer or member of the company is guilty of an offence in r<>hition to the compniiy for which he is criminally IIIRS. 880 DOMINION WINDING-UP ACT. Sect. 138. liable, tlie court may, on the application of any person interested ■ — in such winding-up, or of its own motion, direct the liquidator to institute and conduct a prosecution or prosecutions for such offence, and may order the costs and expenses to be paid out of tJie assets of the company. E. S., c. 129, s. 96. Pestruction 139. l']very person who, with intent to defraud or deceive of books or .^j^y person, destroys, mutilates, alters or falsifies any book, thSeiu"*^^ paper, writing or security, or makes or is privy to the making of any false or fraudulent entry in any register, book of account or other document belonging to the company, the business of which is being wound up under this Act, is guilty of an indict- Pcnalty. able offence and liable to imprisonment in the penitentiary for any term not less than two years, or to imprisonment in any gaol or in any place of confinement other than a penitentiary for any term less than two years, with or without hard labor. E. S., c. 129, s. 95. See also s. 415 of Criminal Code (1906), which renders an officer or employee of the company guilty of such an offence liable to seven years' imprisonment. Failure to 140. Any liquidator, director, manager, receiver, officer or ^"'•d"'?of^^'^^ employee of a company, failing to comply with the require- "ourt. ments or directions of any order made by the couTt under this a contempt. ^^^^ gj^j^jj ]3g guilty of contempt of court and shall be subject to all process and punishments of such court for contempt. Removal of 2. Any liquidator so failing may in the discretion of the liquidator court be removed from office as such liquidator. E. S., c. 129, ss. 38, 39, 40 and 83. from office. R<.fiisal hy 141. Any refusal on the part of the president, directors, officers of officers or employees of a company to give all information to*"\'ve"^ possessed by them respectively as to the affairs of tlie company inforinntion. required by the accountant or other person ordered by the court under this"^ Part to inquire into the affairs of the company and to report thereon, shall be a contempt of court, and such presi- Penalty. dent, directors, officers or employees shall be subject to all pro- cess and punishmonts of such court for contempt. E. S., c. 129, s. 11. Failure to deposit in bank money of estate. I'enalty. 142. Every liquidator who shall not within tbree days after the date of the final winding-up of the business of the company, deposit in the bank appointed or designated as hereinbefore provided, any money belonging to tlie estate of which he is such liquidator, then in his hands and not required for any other purpose authorized by this Act, with an account of such money, and a sworn statement that the same is all that he has in his hands, shall incur a penalty not exceeding ten dollars, and not less than ten per centum per annum interest upon the sums in OFFENCES AXD PENALTIES. 881 his hands for every day after the expiration of the said three Sect. 142. days on which he neglects or delays such payment. E. S., c. 1-29, s. 40. 143. Every person being brought up for examination before j^gfugal of the court after the court has made a winding-up order, or ap- witness to pearing before the court for such examination, who refuses gubrcribe^'is without lawful excuse to answer any question put to him or to a contempt, subscribe any answer made by him on such examination, shall be guilty of contempt of court, and shall be subject to all process and punishments of such court for contempt. R. S., c. 129, s. 82. • ^ Evidence. 144. If the business of a company is being wound up under pooks to be this Act, all books of the company and of the liquidators shall, prima fade as between the contributories of the company, be prima facie eoutents. ^ evidence of the truth of all matters purporting to be therein recorded. R. S., c. 129, s. 53. Compare Imperial Companies Act, 1862, s. 154. The books are made prima facie evidence. Thus an entry in an allotment book (tli()n<>-li there was no record of a meeting on the date of the entry) coupled with the admission of the contributory was prima facie evidence of allotment and threw on the contributory the burden of proving the allotment invalid: In re Great Northern Salt, &g., Works, Ex p. Kennedy (1890) 44 Ch. D. 472. The section does not, however, make the books prima facie evidence in favor of the liquidator against a contributory where the issue is substantially one between a creditor of the company and the person proceeded against as shareholder: lit Ji/frrnafional Electric Co., Ltd., McMahan's Case (1914) :]1 O. L. K. 348; 20 D. L. R. 451. The entries in the ))0()ks ])eing prima facie evidence only the facts therein stated may be rebutted: Paf/e v. Austin (1885) 10 S. C. R. 132. 145. Every atlichivil, alliniiation or (U'chiiation required to Affidavits, be sworn or made under the provisions or for the jxirposes of before whom this Act, or to be used in the court in any proceeding under ««"^'"- this Act, may be swoin or made in Canada before a liquidator, judge, notary public, ('oiiimissioncr for taking afTidavits or justice of the peace; and out oT Tanada. Ix'f'w.. jmy judg<^ "f n D.C.A.— .56 SS2 DOMINION WINniNG-Ur ACT. Sect. 145. ^oiivt. of record, any commissioner for taking affidavits to be used ill juiy court in Canada, any notary public, the chief numi- cipal officer of any town or city, any liritish consul or vice- consul, or any person authorized by or under any statute of Canada, or of anv [irovince, to take affidavits. E. S., c. 129, s. 88. 146. All courts, judges, justices, commissioners and persons acting jiuiicially shall take judicial notice of the seal, or stamp orsignatiu-e °^' ^^^"i^ture as" the case may be of any such court, liquidator, "judge, notary public, commissioner, justice, chief municipal . officer, consul, vice-consul, or other person, attached, appended or subscribed to any such affidavit, affirmation or declaration or to anv other document to be used for Ihe purposes of this Act. R. S.,"'c. 129, s. 89. J tidieial uotice of Copy . of order evidence of order. 147. When any order made by one court is required to be enforced by another court, the production of an office copy of tlie order- so made certified by the clerk or other proper officer of the court which made the same, under the seal of sucli court, shall be sufficient evidence of such order having been made. R. S., c. 129, s. 85. See the notes to ss. 126 and 127. In proceeding's in a court of a province other than that where the winding-up order was made to set aside an attachment made after the winding-up order, an affidavit by one of the liquidators setting out the fact of the making of the order was held to be sufficient proof thereof: Salter v. St. Lawrence (1896) 28 N. S. R. 335. . 148. The absence of mention in the minutes of any meeting pnlduce '^ of contributories, creditors, shareholders or members under this pass-book, ^^^t, of the production of the liquidator's bank pass-book, shall liow proved. ^^ p,.^^Q fdf^ig evidence that such pass-book was not produced at such meeting. R. S., c. 129, s. 37. PART II. Banks. Application l^^. The provisions of this Part apply to banks only, not of Part. including savings banks. R. S., c. 129, s. 97. Creditor for what amount to apply. 150. The application for a wdnding-up order shall be made by a creditor for a sum of not less than one thousand dollars. R. S., c. 129, s. 98. BANKS. 883 151. The court shall, before making the order, direct a Sect. 151. meeting of the shareholders of the bank and a meeting of the — — : . creditors of the bank to be summoned, held, and conducted as court for the court directs, for the purpose of ascertaining their respective meeting of wishes as to the appointment of liquidators. E. S., c. 129, s. 98. Irg'^n^ creditors. 152. The court mav appoint a person to act as chairman of nK„;..™..„ nf -i*'t t t I* 1 (* 1 • I J V- 11 <1 11 III till tic the meeting of shareholders, and m default ot such appointment, meotinjrs of the president of the bank, or other person who usually presides shareuolders. at a meeting of shareholders, shall be chairman. E. S., c. 139, a. 99. 153. The court may also appoint a person to act as chairman chairman of of the meeting of creditors, and in default of such appointment, meeting of the creditors at the meeting shall appoint a chairman. E. S., c. ^^^ ^^^^^' '129, s. 99. 154. In taking a vote at the meeting of shareholders, regard voting as at shall l)e had to the number of votes conferred by law, or by the bank regulations of the bank, on each shareholder present or repre- ™*^^ '°^" sented at such meeting. E. S., c. 129, s. 100. 155. In taking a vote at the meeting of creditors, regard Voting shall be had to the amount of tlie debt due to each creditor. ^^.s»J|ij^t^«^ . E. S., c. 129, s. 100. ■ ■ 156. The chaiiTiian of each meeting shall report the proceed- Report to ings of the meeting to the court, and, if a winding-up order is ^'oun made, the court shall appoint one or more liquidators not exceed- Appoint- ing three to be selected, in its discretion, after such hearing of ^^^'j j.^^rs the parties as it deems expedient, from among the persons nominated by the majorities and minorities of the shareholders and creditors at such meetings respectively. E. S., c. 129, s. 101 ; 52 v., c. 32, .s. 17. 157. Jf no one has been so nominated, the liquidator or Court li(|uidators shall be chosen by the court. 52 V., c. 32, s. 18. appoints. In o-cncral it may be slated llial tlic (A»urt will appoint tlie nominoo of that class which is most intor- estc'fl in tlio liquidation. And when the doii])le liability of the shareholders of a bank was likely to be called up, the nominee of the creditors was preferred to that of the shaicliolders: Br Central Bank (1887) 15 0. R. 309; Be Bauk of Liverpool (1889) 22 N. S. 97; (1891) 18 S. C. R. 707. There is nothiu.ir in the provisions of the Windin.ii;- up Act which rcMpiircs tliat both creditors and share- holders slioukl be represented on the board of ]i(|uida- 88-1 DOAIJMON WINDING-UP ACT. Sect. 157/ tors : Forsi/ili v. Bank of Nova Scotia (1890) 18 S. C. r.auks. ^- ^^'^• When a coiupaiiy was being wound up by the sheriff under the Ontario Voluntary Winding-up Act, and the assets and books of the comi)any were in the county, he was appointed liquidator by the Court in preference to a nominee residing out of the county of the petitioning creditor: Be Alpha Oil Co. (1887) 12 P. R. 298. In Be Commercial Bank of Manitoba (1893) 9 Man. 342, it was said that the Court is confined to a selection between the persons nominated at the meetings pro- vided for in these sections but may exercise its discre- tion, and it is not bound to accept the choice of the majority. Where the company is solvent the nominees of the shareholders will be preferred, but if it be in- solvent or its solvency questionable the wishes of the creditors should be preferred. It was further con- sidered undesirable to appoint a debtor of a company, even if the company held securities, if the security was at all doubtful. Reservation ^^- '^^e liquidators shall ascertain as nearly as possible of dividends the amoiuit of notes of the bank intended for circulation and st-ind^uff actually outstanding, and shall reserve dividends on any part of notes. the said amount in respect of which claims are not filed, until the expiration of at least two years after the date of the winding- up order, or until the last dividend, if such last dividend is not made until after the expiration of the said time. Applied to 2- If chiims arc not filed and dividends applied for in respect subsequently of anv part of the said amount before the period by this section filed claims. ||,^^-^g^j^ ^1,p dividends so reserved sliall form tlie last or part of the last dividend. E. S., c. 129, s. 103. PublicatioiT ^^^- I'ublication in the Canada Gazette and in the official of notices. gazette of each province, and in two newspapers issued at or nearest to the placc' where the head office of a bank is situate, of notice of any proceeding of which, under this Act creditors should be notified", shall be sufficient notice to holders of bank notes in circulation. In Quebec, 2. If the head office is situated in the province of Quebec, publication Qjjg Qf ^j^^ newspapers in which publication is to be made shall in English , 1 T 1 T • Ti I- 1 Til J.1 and French, be a newspaper published in English and the ottier a newspaper published in French. K. S., c. 129, s. 104. LIFE INSUEANCE COMPANIES. 885 PART III. Sect. 160. Life Insurance Companies. 160. The provisions of this Part apply only to life insurance Application companies, and to insurance companies doing life and other of Part, insurance, in so far as relates to the life insurance business of such companies. E. S., c. 129, s. 105. Note ox Insurance Sections. By section 162, the assets are to be applied pro rata towards the discharge of all claims of policy holders in Canada. There is no definition in the Winding-up Act of the term 'policy holders in Canada,' but there is a definition in the Insurance Act, 1917, c. 29, s. 2 (s). A question arose in Ontario in the winding up of the Massachusetts Benefit Association as to the meaning of the expression. The Master ref eft-red to this defini- tion, and in a measure adopted it, but, having adopted it, found that it still required interpretation. The cir- cumstances were that a policy had been issued on the life of a person resident in Canada, but it liad been made payable to a person resident in the United States, and the question was " in whose favor," in tlio words of the corresponding s-s. H of the former Act, the policy was issued. The claim was made by the United States citizen and the Master held that the person on whose life the policy was issued was the person in whose favor it was issued, no matter to whom it was i)ayal)le. The cas<' does not appear to be reported. Under section 111 (section 170 of this Act) in the same winding-up, several claims accrued after the dale of the winding-up oidci-, l)efore the expira- tion of the thirty days mentioned. On many of the policies under wliich these claims, arose there accrn<(l, according to the terms of the i)olicy, pre- miums after the date of the winding-up, and Ix'fore the policy became a claim, tlie death of the i)olicy holder having happened some months after tlie wiud- ing-u]) ()r(h'i-, and thi^ premium day having passed in the meantime. Th<- |)remiums naturally were not jtaid because the company had gone out of existence as a 880 DOIMINION \VIN1)IN(!-Ur ACT. Sect. 160. living' company, and thore was really no one to whom to pay ilu> ]n-eminms, the liquidator not representing the company as a going concern. These cases were treated as if no default e.\istcd on the part of the policy holder by reason of this non-payment, but as a condi- tion of the allowance of his claim, the beneficiary was required to pay to the liquidator the amount which had thus accrued due in full, and then he was collocated on the list of allowed claims for the amount of his policy. These decisions were followed in the winding up of the Covenant Mutual Benefit Company. It has also been held in valuing policies under s. 108 (ss. 165 & 166 of this Act) that beneficiary certificates of mutual in- surance companies had no value beyond the amount of that portion of the current instalment of premium which had been paid and remained partially unearned at the date of the winding-up order. The case of Re Merchants' Life [1901] 1 0. L. R. 256, is not in conflict with this view as it was determined on the particular w^ording of the Ontario Insurance Act. Company 161. Whenever a license of a company has expired or been without withdrawn under the Insurance Act, and lias not been renewed as fof ^ within thirty days after such expiry or withdrawal, the corn- insolvency, pany shall be subject to the provisions of this Act applicable to the case of insolvency of such a company, except in case of, — Exceptions. (a) a company which previously to the twenty-eighth day of April, one thousand eight hundred and seventy-seven, was licensed to transact the business of life insurance in Canada and ceased to transact such business before the twenty-first day of March, one thousand eight hundred and severity-eight, having before that date given written notice to that effect to the Minister; or, (&) a company licensed under the Insurance Act to transact the business of life insurance in Canada which has, in manner provided by the said Act, procured the transfer of its outstanding policies in Canada to some company or companies licensed under the said Act, or obtained the surrender of its policies as far as practicable. E. S., c. 129, s. 106. Application 162. In case of the insolvency of any company, the de- of fleposits posits of such company held by the Minister, and the assets held anc asse . ^^ ^^^ trustees under the Insurance Act, shall be applied pro rata towards the discharge of all claims of policy-holders in LIFE INSURANCE COMPANIES. 887 Canada diilv autheuticated against such compan3^ E. S., c. Sdct. 162. 129, s. 107. ' 163. Upon the insolvency of any company and the making Claims of of a winding-up order under this Act, the policy-holders in Can- policy-hold- ada shall be entitled to claim for the full net values, including Canada, bonus additions and profits accrued, of their several policies at the time of the winding-up order, less any amount previously advanced by the company on the security of the policies. 2. Such claims shall rank with judgments obtained and Rank with claims matured on Canadian policies, in the distribution 'of the J^'^sments. assets, a. S., c. 129, s. 108. 164. The liquidator may require the Superintendent of In- valuation of surance to value, or procure to be valued under his supervision, policies, the policies of tlie policy-holders in Canada, on the basis pre- scribed in the Insurance Act. 2. The expenses of such valuation, at a rate of three cents Expenses, for eacli policy or bonus addition so valued, shall be retained by the Minister from the securities hold hv him. 62-63 V., c. 43, s. 6. 165. Upon the completion by the liquidator of the statement Sale of seeu- to be prepared by him of all judgments against the company ;''^^'^^ 'V"^ upon policies in Canada, and of all claims upon policies matured order of" the or outstanding, the court shall cause the securities held by the court. Minister for such company, and the assets held by the trustees provided in the Insurance Act, or any part of tliem it deems fit, to be sold or realized in such manner and after such notice and formalities as the court appoints. R. S., c 129, s. 108. 166. The proceeds so realized, after paying expenses in- Distribution cnrred, shall, except in so far as they have been applied under ^^ proceeds, this Act to effect a re-insurance of policies, be distributed pro rata amongst the claimants according to such statement. 2. If the proceeds are not sufficient to cover in full all H<'course if claims recorded in the statement, such policy-holders shall not jjot' pove/ ° be barred from any recourse they have, either in law or equity, claims, against the company issuing the policy against any shareliolder or director thereof, other than for a sliare in the distribution of the proceeds aforesaid, or in respect to any distribution of the general property and assets of the company, other than the deposit mill I he assets vested in trustees. R. S., c. 129, s. 108. 167. Whenever the company or the liquidator, or the holder {r such purpose by the Superintendent of Insurance, for the re-insur- ance by such company of the outstanding risks of tlio insolvent company, and for the' assumption by such compnnv <.f the whole 892 DOMINION WINDING-UP ACT. Sect. 185. or auv i>iirt of tlio oilier linliiliiios ol Ilic insolvent, eoinpany. rayiiuMit of promium. Application of surplus. 186. In case of such arraugeinont tlie li(iuidator may pay or transfer to sncli company, such ol' the assets of the insolvent company as may be agreed on as the consideration for such re-insurance or assumption, and in such case the arrangement for re-insurance shall be in li(Hi of the claim for unearned premium. 2. Ami remaining assets of the insolvent company shall be retained by the licpiidator as a security to the creditors for the payment of their claims, and shall, if necessary, be so applied, and shall not be returned to the company, except on the order of the court after the satisfaction of such claims. E. S., c. 189, s. 121. 187. If the company is licensed under the Insurance Act, the liquidator .shall report to the Superintendent of Insurance once in every six months, or oftener, as the Superintendent requires, on the condition of the affairs of the company, with such particulars as the Superintendent requires. H. S., c. 129, s. 122. What pub- 188. Publication in the Canada Gazette, and in the official lication of gazette of each province, and in two newspapers published at or nearest to the place where the head othce ot an insurance company is situate, of notice of any proceeding of which, under this Act, creditors are to be notified, shall be sufficient notice to holders of policies or contracts of insurance, in respect of which no notice of claim has been received. R. S., c. 129, s. 123. Report to .Superinten- dent of Insurance. notice sufficient. INDEX Abortive Company Shares in, agreement to take, 216. Actions Company, in name of, after liquidator appointed, 549. Deceit, for, 548. Description of company in writ, 548. False imprisonment, for, 547. Mode of incorporation need not be set out in, 544. Service of process on company, 547. Shareholders, between company and, 544, 545, 546, 547. Shareholders suing on own behalf, 549. When company should be plaintiff, 548. ^^'inding-up, stay of actions on occurrence of. 735, 736. Witlulrawal from, by company, 548. Administrators Trans-fcrs by. See Transfer of Shares. Whether are shareholders, 319. Advantages of Incorporation, 51. Agencies. Right to Establish, 113. 114. Agent Individual liability of, 116. See also ' Contracts.' Misrepresentation by, 198, 199. Subscription, made by unauthorized, 79U. Agents Apparently actins within authority, 142. Ai)i)ointment, formalities rcfpiired, 131. 'Autiiority of, when contracting for company, 1,33IT. Course of dealing, 140. Do facto. i:;!). Es'toppel, 141, 142. Holding out. 140, 141. 401. Implied warranty of authority, 1 10. Notice to, is notice to company, 150. Ostensible authority, 141, 142. Personal liability of, 140, 147. rersonal liability of on bills, notes and cln'riues, 1-17, I-IH. Ratification, 148, 149. Torts f)f. li.ibility of company for, 1'19, 150. Allotment Cancellation of, 303, 304. Disju'Tisod with — Signatory to nu'Dioivindiini of au'recincnt. 785. Tllegality. inff)rmality. ftc.. as a defence, 78S, 789. Interpretation of term, 4. 81)4 INDEX. Allotiirent" r^()fi/»«H('egi.slation respecting, 1. Bills Personal liability of agents and officers on, 147, 148. Bills of Exchange liorrowing by, 350. Bills, Xotes and Cheques, 133. Xaini' with Word ' liniiti'd ' must ai)|»car un. 15U, 151. Seal not required. 115. Bona Vacantia, S7. Bond, 4, 5. Coupon, 5. Rcu'istcrcd, .5. Bond Mortgage Described, .">. See also Trust Di'fd. Bondholders Modification of rights', 417. Sec also Trust Deed. Bonds i'.'ar.r and registered, 382-.S84. I '.ill of Exchange, difTerencc between bonds and, 377. lionns of common stock, giving of. on issue of bonds, 370, ,380. 3SG. 89(3 INDEX. Bouds — ('(III till ind lioiul inurtsaiii'. See Trust Dood. Cboses iu jictioii. bouds are, oS4. Commission mi placiug, particulars to be given for registration, 352, 353. Contrat't to luiroliaso. ;>S5-,'>87. Remedy for default by purchaser, 385. Measure of damages, 385, 386. Specific enforcement of, 385, 386. Copy of certilicate of registration to be endorsed on, 353. Coupon, nature of, 377. Coupons, 403. Debenture, described. 376, 377. Debenture b-toclc compared with, 387, 389. Default- Effect of winding-up on ))ondliolders' remedies, 409, 410, 411, 412, 733, 825. Enforcing security on, 406-412. Jeopardy, 409. Remedies of bondholders or trustee, 408ff. Who may exercise remedies on, 412, 413. Definition of term, 3. Delivery of particulars to Secretary of State, 352. Deposited to s'ecure advances, when not to be considered to have been redeemed, 350. Description of the term, 376, 377. Endorsement of certificate of registration on, 353, 398. Enforcing security on default, 406-412. Right as to, on winding-up occurring, 825. Equities, transferable free from any, 383, 384. as against unregistered holders, 384, 385. Floating charge, 380. Creation of, 390, 391, 392. Crystallization of, 394. Distress, priority of, 394. Equitable mortgage, priority of, -J94. Execution creditors, priority over, 393. Garnishor, priority over, 393. Nature of, 380, 390. Notice of, as regards specific mortgagee, 393. Ordinary course of business, right of dealing with property of company in, 391, 392. Payment of certain debts to have priority over, wiu-re receiver appointed or bondholders take possession, 356, 357. Preferential claims under Winding-up Act, priority of, 356, 357, 393. Registration of trust deed, containing, 351, 396, 397, 398. Restriction against creating ijrior cliarges, 393, .'!94. Sale of bus'iness, notwithstanding floating charge, 393. Specific charge taking priority over, 392, 304. Interest in land, whether bonds deemed to be an, 384. Irredeemable, 350, 358, 377, 404. Irregularities in issue of, 368, 369, 380. INDEX. 897 Bonds — Continued Issuance, 378. Agreement for, 380. By individuals, 378. Debenture holders' action, after commencement of, 379. Discount, issuance at a, 379. Irregularity in, 380. Option to call for, 381. Past debt. for. 379. Prospectus, where issued to public, 173, 176, 381. Seal, not under, 378, 379. Modification of rights of bondholders', 417. Mortgage bonds, 389-395. Perpetual, 3-50, 3.58. Power to re-issue redeemed bonds, 350. Pledge of, 372. Presentation for payment, 378. Purchase, contract to purchase, 385-387. Redeemed, power to i-e-issue, 350. Redemption, 404, 405, 406. Clogging equity of redemption, 405, 406. Register of holders of debentures, open to inspection, 356. Register of mortgages to be kept by company, 355. Registered and bearer, 382-384. Re-iss-uc of, 350. Series of, 381, ,382. Set-off by bondholder, 395. Specific charge, .'589. Notice of floating charge, 393. Trust deed. See Trust Deed. Winding-up, enforcing rights under security in event of, 743, 744. Bonus, I.'52. Books, -l-'i. Access Id, pi-occdure for obtaining, 543. Auditor's right of access to, 538, 543. Defer-tive, 5.'?2. Entries in, how proved, 5.j9. when admissible as evidence, 559. False entries in, .5.34, 880. Penalty, 560, 562. Inspectiftn of, 5.".2, .~i33. -\nditor, right of, 5.34. Dircclors-, rights of. .'".3 J. Siiarcholders and cre','A. Rofusiil ot" iiispiH'tion, poiuilt.v, 502. Shart'luildcr, !ipi)o;irin,i; in books .as, effect of, 785. Stock ledger, 10. Transfer book, 10. \\'liat tlicy must contain, 531. Wliilhcr iiu'liidcd in liciieral cli.Mrfic of all property, 366. Borrow^iug Authority, b.\-la\v conferring, 349. Bonds. See ' Bonds.' Borrowing- by-law, 42, 43, 349, 36G-3G9. By-law for, how far necessary, 36<)-3(>9. By-law, required by banks, 42, 43. By-law, passed by provisional directors, 369. By bills of exchange or promissory notes. 350. Borrowing powers, 3490". Debentures. See ' Bonds.' Facilities of companies, 52. Information as to mortgages, charges, 351ff. Particulars, delivery of to Secretary of State, 351, 352, 353. Interference with powers' of directors, as to, 363. Irregularity — Rule in Royal British Bank v. Turquand, 480, 490. Irregularities in exercise of borrowing powers, 366-369. Power to borrow money. 106. To mortgage, 106. After acquired property, 107, 108. Powers — Conferred by the Act, .361. Exercise of, 358. Implied and express, 359-.361. Limited. .300. 361. Procedure for exercising, .362, 363. Semi-public corporations, 360. Trading company, 359, 360. Precautions to be observed by persons lending money to com- panies, 361, 362, 369. Procedure for exercising borrowing powers, 362, 363. Purpose of, lenders not l)oun(l to inquire, 361. Liquidator, by, 769. Registration of mortgages and charges, .351, 352, 358, 398. Restriction on amount, violation of, .373. Security for existing debts, giving, distinguished from borrowing, 358, 369, 370. 371. Security, nature of, which ma,\' be given, ,364, 36.5, 366. Ultra vires — Effect of, 373. Directors, remedy against, 374, 375. measure of damage.s, 375. T^ender's right of subrogation, 374. Relief in case of, 374. INDEX. 899 Borro'wring — Contin ued Remedy a.ijaiust directors, 374. Securities ultra vires, but debt valid, 375, 376. Uncalled capital, mortgage of, 364. See alsro ' Bonds,' ' Bond Mortgage,' ' Trust Deed.' Business Commencement of, 65. See ' Commencement of Business.' Commencement of, by company with shares of no par value, 31. By-lawrs Authorizing holding of shares in other companies, 217-220. Confirmation — Individual assent of shareholders, distinguished from, 505. Defined, 5. Deposit in department i-equired in certain cases, 450. Evidence of. 547, 560. Bonds, debentures, etc.. for issuing, 350. Borrowing money for, 349, 350. See Borrowing. Calls on shares, making, 280. Confirmation of, in certain cases, 463, 491. Consolidate shares, to, 264. Corporations witlunit share capital, of, 46. Director.s — I'ow(jrs of. to jiass. 463, 465. Distinguished from resolutions, 491. Illegal, examples of, 492. Increase capital to, 264. Irregularity of, in res-pect of borrowing, .368. Preference shares, creating. See Preference Shares. Purchase fractions of shares, to, 264. Shareholders' control over, 481, 482. Sharcliiilders, power to pass, excluded, 492. Sul)divide shares, to 264. Calls Amount of, 283. Anioiint to be calli'd up within first year, 274, 276. By-law, prescribing mode of making calls. 281. By-law, whether necessary, 280, 281. Cestui (pie trust, obligation to iiulcnuiify trustee against, 280. Contributory, commencement of liability, 801. Date of payment, 283. Defences to action for calls — Denial that defendant became a sharelinlder. 292. Infancy. 29:!, 294. Other defences, 293. I'ayment, 292. Transfer of shares' before call, 293. Definition of 'Call,' 276. Delegation of power to make. 284, 299. Direetors allowing to remain unpaid. 19 1. Disability of shareholders where calls in .'irrears'. 297. 298. i)00 INDEX. Calls — ( 'on till ind DiscTi'tion of diii'clors in iiialviim. 12T(!. L'TT, UTS, liy^. Wbfu iuterferoil with, L'TT. Disorgaiiizatiou of conipaii.v, flTiH't of, L'JSI>, 288. Duty of directors. 294, 2!>r>. Eufort-i'inout of paynu'iit by action, 275, 291. Executors, liability for, 280. Forfeiture fur iion-payiiieiit, 275. !See Forfeiture of Shares. How made, 2S0. Interest on, 274. IiiC(iuality in niakiiig calls, effect of, 2T7, 278. lastahneuts, 7. Ktl). Meaning of term, 169. Comity Kuli^ of. ;ipi)liefl to companies, 18, 27. Coiuiuenceiueut of Business, 45. fJo. JJffiire required capital subscribed. 546. Borrowing powers, exercise of before requirements complied with, 3G0. Company with shares of no par value, 31, 66. Contributories, non-compliance by company with requirements, how affecting, 67. Directors, liability for premature, 66, 512. Effect of non-eompliauce with requirements, 66. Liability of directors for premature, 66, 512. Requirements, 65, 66. Commission Debentures, for procuring subs^criptious for, filing of particulars, 352, 353. Disclosure in prospectus of amount or rate of, 174. Common Seal See Seal. Companies Joint stock, 51. Advantages of, 51. Limited liability, 51, 52. Division of capital, 51. Borrowing facilities, 52. Powers of directors, 53. Transmissibility of shares, 53. Shares, 53. Companies' Clauses Part IL, 563, 564. Company Distinguished from partnership, 49, 51, 52. Private, 49, 176, 177. Public, 49. Quasi public, 49. Special Act, incorporated by, 49, 50. Under Act. nature of, 7. Unincori)orated, 58. With shares of no par value, 7, .30, 31, 47, 48. Commencement of bu.siness by, 31, 66. Dividends of, 31. Conditional Subscription, 245, 789. IXDEX. 903 Conditions Precedent Non-compliance as ground for forfeiture of charter, 71. Non-performance in respect of letters patent, 12, 13. To obtaining corporate status, 545. To legal organization, 546. Conditions subseqirent Nou-fulfihui'ut as ground for forfeiture of charter, 72. Consolidation of Shares By-law for, 264. Procedure, 264, 274. Contracts Agent of company, 115. Agents — Formalities in appointing, 131. See also Agents. Agents' and officers, authority of. 13311". Agents de facto, 139, 140. Apparently acting within authority, 142. By-laws, authority conferred by, 134. 135. Course of dealing, 140. Directors, delegation by, 134. Directors general agents, 134. Estoppel, 141, 142. Evidence of authority, 134. Treading principles, 135-139. Ostensible authority, 141. When employed by directors, 136. Agents, officers and servants, made by. 118. Capacity to enter into, 119. Bills, notes and clie(iues, 133. Construction of section 32, 117. Executed contracts — Enforced where not under seal, 123ff. Not enforced where not under seal, 122, 123. Executory contracts not under seal, nut enforced, 127. Form of contract, 130. Formalities re4-]06. See also ' Winding-up.' CroAJPn I'rif)rity of, in winding-up, 809, 810. Damages For breach of agreement to transfer shares, 337. For refusal of company to register transfer. 3.35. 330. Measure of, in action for deceit. 194. Deadlock, ground for winding-up, 701. Debenture, definition, 3, 8. Debentures See Bonils. Debenture Stock Definition, 3. Distinguished from bonds, .387-389. Copy of certificate of registration t.. bo endorsed on certificate!? of. 3.53. See Bonds. 906 INDEX. Deceit Action against ((irpDratioii for. 548. • Aotiou for. for nii.srepresoiitatioii in inospcclns, 1!).^, l!)-l. 10."). See also rro-s'peetns. Definitions, 3-11. Tradins company. 35!). Director .Vuditor. may not be appointed, 537. Liability— P.alance sheet, issuing vvilluml auditm's rcpdrt attached, 539. Managing director, authority of, 135. Rislit of inspection and taking cojjios from company's books, 534. Directors Allotment — By incomplete board, 233. Delegation of powers of, 283. Auditors — Filling vacancies in office of, 5.38. Fixing remuneration of, 538. May appoint first, 538. Accounts, need not test accuracy of, 543. Borrowing by, 349fif. Interference with powers of, 363. See also ' Borrowing.' By-laws, 463, 491, 492. Calls by. See Calls. Changing number of, procedure for, 450, 451. Non-compliance with Act, effect of, 451, 452. Commissions taking, 472. Company acting as director, 448. Consent to act, 445, 447. Contracts of, with company, 475-480. Action to set aside, 480. By-law, necessity for, 476. By-laws authorizing contracts, 477. Disclosure, necessity for, 478, 479. Right of director to enter into contracts with company, 475. Shareholders, sanction of, 476, 477, 478. Contract to take qualification shares, 445, 447. Criminal liability for false statements in prospectus, 203. De facto, 460, 461. Carrying on affairs of company, assisting in, 445. Liability of, 430, 495, 512, 556. Restraining from acting, 461. Delegation by. I'.'A, 485. Allotment, 233. Calls, 284, 299. Disbursements, indemnifying for, 462. Disclosure by, when contracting with company, 478, 479. Discretion — Calls, discretion to make, can not be delegated, 284, 290. Transfer of shares not fully paid up, permitting, 3()9, 321, 323. INDEX. 907 Directors — Continued Transfer of shares, when shareholder indebted to company, 309, 324. Disqualified directors, presence of. on board, 436. 437. 456. Disqualification, 448. Absenting themselves from meetings, 449. Bankruptcy, 449. Contract, being interested in, 450. Holding any other ofiice, 449. ' Making unauthorized profit, 449, 450. Where directors contract with company, 477. Diverting company's business in their own favor, 470, 471. Duties — Reserve fund, as regards, 435, 4.36. See also ' I'owers and l>uties',' infra. Election of, 444, 452, 453. Agreement by company for election, 452. Ballot by, 453, 454, 455. Equitable jurisdiction to set aside, 450, 458. Formal, when unnecessary, 455. Mandamus, 458. Mandatory injunction, 458. Place of, 452, 453. Procedure to set aside, 457, 458, 459. Quo warranto, 457, 458. Regularity of, 456, 457, 458, 459, 460. Scrutineers, also candidates, 457. Shareholders, right to elect, where no directors in office, 4.56. Vacancies, filling of, by directors, 453, 455. Yearly, 453, 454. Examination of, in support of winding-up petition. 706. Executive committee of. 485, 486. Exercise of powers, 487-492. Failure to elect, how remedied, 443, 1 11. Fees of. See ' Remuneration.' Fiduciary relationship, 46!). Termination of, 473. Termination (m wind'ng-up, 758. Future shareholders, liability to, 469. General agents for company, 134. Implied warranty of authority by, 102, 105. Incomiilete board, powers of, 455. 1.5<>. Incrf-aw! of, by-law for, 450. Indemnified in suits respecting execution of ollice, 462. Individuals, no authority if iictiiig ns, 485. Ratification by .shareliolders. 485. Interest of, to be stated in prospectus. 175. Irregularity in proceedings of, 489, 490. Liability. 4'.Y2-4m. .\llowing transfer of .shares to insolvent, 506. exoneration from liability, 506. Bills and notes. M^C. Bonus .shares, [lermitting allotment, 683. 908 INDEX. Directors — Cunt in ucd Komis shiiros. trjinsforriiij;. '^20. fiS.'?. ri)iitrihiiti(in. rijilit o\'. ITS, 1!)<). I!)?. Criminal liability. 20:5. 4!)S. DodariiiK tlividoiul whoii cdiiiiimh.v iii.sulveut, 505. Exoneration from liability, 505. De facto directors, 430, 495, 512, 556. Dividends improperly declared, 31, 429, 430. 431, 497, 505. Dividends out of capital, 497. See also Dividends. Gifts, to refund secret, 212. Irregularly appointed, 430, 495, 512. Limited, failure to use w^ord, 498, 499, 501. Loan to shareholders, assenting to, 506, 507. Misfeasance of, 493ff. Negligence, for, 494. Articles, relieving against, 493. Non-attendance at meetings', 495, 869. Non-intervention in company's affairs, 495. Penalties, 498. Permitting transfer to be registered in contravention of equit- able rights, 262. Premature commencement of business, 66, 512. Profit, secret, 472, 473, 478, 479. Prospectus — Statements in prospectus, 177. Wrongfully inserting name of director in prospectus, 178.- Resignation, effect of, 496. Secret profit. 472, 473, 478, 479. Torts, liability for their own, 497. Transferring bonus shares, 329, 683. Ultra vires acts, for, 102, 105, 49r), 497. Wages of clerks, labourers, etc., 50711. And see ' Wages.' Wrongful declaration of dividend, 31, 429-,31, 497, ."i05. See also ' Misfeasance.' Meetings of, 487. By-laws, 491, 492. Chairman's casting vote, 488. Interested director not to be counted in making quorum, 490. Irregularities in proceedings, 489, 490. in regard to calls, 283, 284. Minutes, 4a9. Ne'glect to attend, not misfeasance, 495, 869. Notice of business, 488. Notice of meetings, 487, 488. Directors absent from the country, 487. Special business, 488. Waiver of, 487. Personal attendance, 488. Quorum, 436. 437, 490, 491. Resolutions, 491. Strangers, pre.sence of, at, 489. INDEX. 909 Directors — Continued Minimum uumber of board, 436. ^linute book of, 489. No risht of inspection by shareholders. 533. Misapplication of fund.s, attempted ratification, 525. Misfeasance, 493ff. Names, addresses and calling to be recorded in books, 532. Non-intervention in company's affairs, 495. Penalties for infraction of provisions of Act, 561. Penalty — Annual summary, for non-compliance with requirements as to, 554, 556. For making false entries in and refusing inspection of books, 562. For refusing to produce books and answer questions on examina- tion by inspector, 503. See also Penalties. Personally interested in contract, adoption by company, 525. Position of, 465-475. Agents and trustees, 466, 468. Contracting in own names, liability, 466, 467. Fiduciary position, 469, 473, 758. Powers of, 53, 48011". Arrangements with creditors, 483. Borrowing money, 349, 350. Borrowing powers. See ' Borrowing.' By-laws, to pass, 94. 95, 463, 491, 492. Cease on appointment of liquidator, 754, 755, 758. Compromise disputes, to, 4S2. Continuance after appointment of li<|uidator, 754. Contracts, 483. Delegation of powers, 96, 485-487. Agents, officers and servants, 134, 486, 487. Examples of powers, 482. Executive committee, appointing, 485, 486. Exr-rcise of powers, 482. 483. Fiduciary donees of power.s'. 469, 470. Raising money, 483. Sharoiiolders interfering with, 481. Termination of powers, 484. I'ltra vires acts of. ratification. ISl. Powers ami I)uties, 463. By-law.s, 94. 95, 4iV.\. 491. 492. As to stock, 463. liorrow.ing for, .349ff. Directors, (lualification, remuneration, 444. -163. .503. Dividends. 46.",. Agents and oIHcers, 4G3. Meetings, 463. Penalties. 463. r'l.iMliKt '«r i-iiiiiii;iii\ "s !i(T:iirs, Ifi.'!. 910 INDEX. Directors — Ctnifinmd rruvisioiiiil- Borrowiim li.\-l:i\v. power to pass, 369. IVnth of, 4-43. Dole.uiition of powers, 439. Pcrniiinent directors, replacing by, 43, 443. Powers of. 437, 438, 439, 440, 441. Under tlie Act. 441, 442. Under P.anlt Act, 440. Procedure by. 443. Termination of functions. 442. Pureba.'je of company's property, by, 470. Qualification, 444. Absolutely, holding shares. 440, 447. Acting without, not misfeasance, S(!9. By-laws i-es'pecting, 444, 4()3. Calls, not in arrear as to, 447. Eligibility, how enquired into, 447. In his own right, holding shares, 446. Joint holding of shares, 447. Los.s' of, 448. Kegistration not necessary, 447. Mode of payment for shares, 447. Share warrants, holding of, not to qualify a director, 310. Quorum, acting without, 436, 437, 490. Filling vacancies when no, 455. llemuueration, 49nff. By-law. necessity for, 503, 504. Capital, out of, 501, 502. Forfeiture of right to, 502, 503. Gratuities, 500. Misconduct, forfeiture by reason of, 503. Paid-up shares, issue of. by way of r(>nnineration, 502. Past services, 500, 501 . Unjustifiable payments'. ."00. Waiver of, 502. Resignation, 450. Effect on liability. 4!)6. 'Restriction of powers, 53, 481. Restrictions on ai)i)ointment or advertisement of, 445. Secret profits, 472, 473, 478, 479. Sending out proxies naming themselves, 529. Single director, authority of, 134. Special general meeting to elect, 444. Terminating appf)intment, 454. Transfer of shares — Duty to confirm. 314. Consent necessary where shares not fully p;iicl-up, .309, 321, 323. Entitled to reasonable time to make enquiries, 340. May decline to allow where shareholder indebted. 300. .324. Transfer of their own shares, consenting to, 471, 472. Travelling expenses, indemnifying for, 462, INDEX. 911 Directors — Continued Trustees and agents of company, 466, 467. Trustees, not generally, for shareholders, 467, 468. Ultra vires acts — Liability for, 496, 497. Ratification of, 484, 485. Ultra vires borrowing, remedy against, in case of, 374. 375. Measure of damages, 375. Ultra vires resolution, concurrence in, 869. Vacancies, after end of term, 444. Filling, 436, 437. Power to fill, 455. Discount Bonds, issuance at, 379. Issue of shares at, 109, 234. Discovery Liquidator, compelled to make. 767. Disorganization Effect of, 60. Dissolution Effect on property of company. 73. Distress See Winding-up. Dividends Accretions to capital, payment out of, 421. Apportionment of, 420. Bonus, 432. Capital and income. 433. Capital — Fixed and circulating. 425. 426. Payment out of, 420ff. Cash, whether payable otherwise than in. 419. 420. Circum.vtances under which payable, 418, 419. Common shares, declariusr on. in derogation of rights uf preference shai'eholi'.ers. 524. Companies subject to the Act. ruh-s applicable, in declarini; divi- dends', 427. Deduction of dc'bts of shareholder from. US. Directors, liability for dividends improperly declared. .".1. 129-31. Illegal, liability of directors. 197. Impairing capital, 113, 418. J>iability of directors and officers, .W5. Inspection, non-payni(>nt not .-i ground for order directing, 537. lyimitatioii of sliareholder's claim for, 419. L(»sl capital, whether must be restored before dividends pjiid. 12211'. Not to impair capital, 113, 418. Payable rateably on number of shares held, 120. Payment out of capital, 2.57. 420IT. Position of shareholder receiving. I-'M. Preference shares, in respect of , 257, 431, 132. Procedure for declaring, 420. 912 IISDEX. Dividends -Contiinud lU'sfivo fund, 431-430. Shiireholder, action by. MRainst diri'ctor, wIkmi' dividond illosally doc-la rod, 4l2i). Sharolioldors. iutorfcrenci' by. witli tlcclaralion oL' dividend, 420. Shares of no nominal oi' iiar viihic. (li\ idem! on. 31. Sbare warrants, providini; for payment by coupons, 309. Stock dividend, 419. Suit to recover, 419. Tenant for life and remainderman, 432, 433, 434. Wasting assets, declaration out of, 428, 429. When company insolvent, liability of directors and oilicers, 505. Withdrawal of, 419. Divisible Profits, 8. Domicile of Company, 113, 114. Dominion Legislation Not repealable by provincial, 21, 22, 23. Double Liability Bank shares, on, 799, 800. Duplicate Definition of, 55G. Elections See ' Meetings ' and ' Directors.' Estate Liability in respect of shares, 166-169. Estoppel Of companj' as regards payment for shares, 158, 159. Of shareholder, by his acts, 241. Transferor and transferee of shares, 331. Evidence, o.jTif. See also ' Books.' Books, of, 547. By-law, of, 547, 560. Charter, secondary evidence of, 560. Incorporation, how proved, 560. Inspectors, report of to be evidence, 536. Ix'tters patent, in what cases, conelusise proof of contents, 560. Of minutes of directors' meetings, 489. Proof by declaration or allidavit, 560. of service by registered letter, 560. Executions Levied after winding-up order, 747. before winding-up order, 746. Lien negatived by s. 84 of Winding-up Act, 748. Keturn after winding-up permitted, 748. Shares, against, 222. Void after winding-up order, 744. Executive Committee of directors, 485, 486. Executor Liability of, in respect of shares, 166-169. Voting rights, 172. INDEX. 913 Executors Of deceased shareholder, iu winding-up, 784. Transfers by, 262, 263. Whether shareholders, 3, 319. Existing Companies Incorporated by Act, incorporation of under Part I., 55. " Incorporation of, 54. Proceedings for incorporation of chartered companies, 55. Publication of notice, 55. Return to Minister, 55. False Iniprisoniuent Aciiuii uuaiust cDnipanj' for, 547. Fees Establishing tariff, 62. / Tariff of, 62. Filing Returns Fees for, G4, 65. Floating Charge, See ' Bonds.' Flotation, 8. Foreign Companies Licensing of. See ' I^icense.' Winding-up of, 694, 695, 696. Forfeiture Land of company, rights of Crown, 110. Forfeiture of Charter, 68£E. Collateral proceeding, raising in, 69. Conditions precedent not complied with, 71, 72. sub.sequent not complied wilh, 72. Effect of, 73. rieneral rules, 68. Ontario Act, provisions of, 69, 74, 605. Partial annulment, 73. Procedure for, 74. Sciri" facias, f]8. Forfeiture of shares, ."i**"). By illegal board of directors, 452. Cancellation of forfeitecl shares. 296. I)eceasi"d s'hiU'eholder, 301. Duty of directors in respect of, 277, 278. Effect of, 294, 296. For non-payment of calls, 275. Iiistiilmeuts, non-payment of. procedure for forfeiture, 279. Irn«ularities in. 299, .'Idu. Creditors cannot take adviinlage of, 300. Li«|uif, iiK-auiug of term, 71)0. Ami see ' Share.s.' Joint Stock Companies Distiuguiished fidiu other corporations, 51. Judge, (Iclineil. .'). Just and Equitable Meaiiiiii;' of term. !). Wiiidiiii:-!!]) (irdfi- wlien, 700. lOjiisdcm nciieris rule. 702. Liabourers, !). Liability of directors for wa^es of. See ' Wages.' Land, .3. I'owcr to accjuire, hold, etc., 109, 110. of Dominion eomi)an,v to iiold, L'O, 21. Lease By company, necessity for seal, 120, 127. Not under seal, i;)2. Lend Money I'..\v.'r to, KiS. 109. Lend on mortgage Power to, 107. Lessee ]'i)sitioii of, as ngainst li(|uidator, 700. Letters Patent Conclusive jjroof of matters set fortli. 11, noO. Copy to be recorded in books, 531. ■Fees for, 03. Forfeiture. See Forfeiture of Charter. Holding shares in other companies, authorizing, 217, 220. Irregularity in granting. 11, 12. Non-performance of conditions precedent, 12. Repeal, jurisdiction of Ontario Court to, 14. Statutory authority to revoke, 14. Subscriber named in, becomes a shareholiler, 785. Supplementary — Extending, varying or reducing powers. 152, 153, 154. Validity of, raising question as to, 11, 12, 13. Liability For infraction of (prospectus) sec. 4.3A, 173. Of company for torts of agents, 149, 150. Of directors. See Directors. Of officer for omitting word ' limited ' from bill of exchange, 151. Of shareholders, 41, 51, 52. See 'Shareholders ' and ' Shares:' INDEX. 917 Libel Company, right to sue for, 549. License Extra-provincial corporations, procedure in Ontario for obtaiu- ing, 075. ilortmain, procedure in Ontario for obtaining license in, G71. Municipal, imposed on companies, 99. Supplementary, increasing capital to be used in Ontario, procedure for obtaining, 678. Licensing Of Dominion Companies, by provinces, 96ff. Lien Definition of term, 828. On shares — Discharge or waiver of. 325. Loss of, .342. Trustee, against, 263. Where shareholder indebted to company, .324. Where shares held by trustee, not for debt of cestui que trus't, 325. Lienholder I'rioi-ity of, in winding-up, 760. Limited Abbreviation, use of, 499. Failure to use word, 498, 499. Name with word ' limited ' i-equired to be used in certain ways, 150, 151, 152. Neglect to keep name followed by word ' limited ' painted or affixed, penalty, .561. Penalty for failure to observe provisions of Act as to use of word, 561. Limited Liability, 51. 52. Loan I'y company to shareholders, forbidden, 8^8. 92, 95, .506, 507, Shares of. 343, .344. Shares, on security of, .341-.343. Loan Companies, 1. 2. I'.-iri 111.. r>r,\. 7,(;r>. Liquidator Accounts, jiassiiig, 779. Action by, 731, 763, 764 ff. Action in name of compan.\ after li0, 7ri4. Several. 753. Shareholder, appoiiitinent of. 752. Who will be appoiuted, 751. Bond— Caucellatiou of. 779. Books, to keep, 7012. Compromise of claims, 771-77o. Contributories, settling list of, 780. 781, 782. Costs, payable by, 783. Court discharging functions of. 77S. Deposit of moneys in bank. 777, 778. Penalty for neglect, 778. Discharge of, 778, 779. Duties of, 734. Calls on contributories, to make, 803. Estoppel, none where litpiidator acts without leave of Court, 763. Foreign company of, duty of, 696. How to be described in proceedings, 857. Liability of. certificate of Mas'ter, 754. Officer of the Court, 758, 759. Position and powers of — Appeal by, without leave of Court, 761. 762. Assets, following, 762. Defects in securities, taking advantage of, 7(W, 761. Exceeding powers of company, 761. Receivers, displaced by liquidator, 761. Powers — Business of company, to carry on, 763, 768. Dispensing with sanction of Court, 774. Drawing and endorsing bills and notes, 763. General acts, 763. General powers, 763. Proving in bankruptcy, 763. Raising funds, 763, 769. Release of claims, 773. Laches, 773. Sale of property, 763, 768, 769. Sanction of Court to exercise of, 764. Suits, 731, 763. 764, 765, 767. Authorization to bring, 764, 765, 774. Continuing proceedings begun by company. 765, 766. Costs, when liable for, 764, 765. Powers and duties. 757-769. Creditors, how far representing, 759, 760, 765. Possession, taking, of a.ssets, 757. Position of liquidator, 758, 759, 760. Provisional, appointment. 750, 754. Remuneration of, 775ff. Priority of, 776. INDEX. 919 liiqnidator — Con tin iicd. Resignation an.l removal, 755, 756, 757, 759. Security, on appointment, 753. Service on, not service on company, 547. Set-off against. 76S. Solicitor, of — Appointment of, 770. Costs of. 770, 771, 777. Suits by, 731, 7(J3, 764fif. ; Discovery by liquidator, 767. Leave to bring, failure to obtain, 766. Whether liquidator should sue in his own name, 731, 763, 765, 766. 767. Transfer of shares, sanction required, 735. Trust company, appointment of, 754. Majorities Rights of, 522ff, 527. Manager Authority of, 1.37, 139, 143. Defined, 3. Liability, balance sheet, issuing without auditor's report attached, 539. Managing Director Authority of. to \nn<\ company, 135, 143. Remuneration of, 504. Mandamus To compel company to register transfer of shares, 334, 335, 340. To set aside election of director.s, 458. Mandatory Injunction Mortgage of shares, compelling mortgagee to vote in pursuance of agreement, .342. Material Contracts rarticiilars to be mentioned in i)rospectus, 174, 175. What contracts are material, 18(), 187. Meeting Court, interference by. to comijel holding of, 514. Notice, contents of, 514, 516, 517. See Notice of Meeting. Shareholders' meeting called fur purpose of passing re-soiutiou to wind up, 699. Meetings, 51.3fr. Adjourned, business which may come before, 527. Adjournment, by chairman. 526, ,"27. Annual. 51.". Balance sheet to be laid before, 552, 553. Information to be laid before. 553. Time and place of, 552. To be held witliin Cnnfida. if directors elected, 515. Chairman — Entry liy. in minute book, prima facie correct, .'>26. Riglils and duties of, 526, .527. See Chairm.nn, Concurr.ii.e «.r vli.ireli.dders dispensing witli meeting. 515. 920 INDEX. Mectiugs — Cunt ill iivd I'lvditors, t'oiitributorics, cti'.. in wiiHliii.^-iip. Sec Wiiuliim-uii. l>ofiiinatiiry statements iit. T)!!). .lUO. Dirortiirs' nioctinss. -IS7IV. Sec nireetors. Notice of directors' meetings, 487, 488. I'xtr.-iordinary, 515. Failure to liold, relief iu case of, 523. General, 444, 515. Casting vote of cliairnmn. 513. ' Majority vote, 513. Notice of, 513. Proxies, 513, 528, 529. 530. Votes at, 513, 527, 528. Held outside incorporating state, 115, 453. Minority rights. See Minorities. Notice of. See Notice of Meetings. Ordinary. 515. Organization meetings, 42. Poll, 529, 530. Chairman, directing taking of, 530. Postponing, after notice sent out, 516. Preference shares, meeting of shareholders to ratify by-law creat- ing, 253, 254. Proxies, 513, 528, 529, 530. Quorum, 531. Resolution, individual consents distinguished from, 515. Right of discussion, 510, 523. Share warrants, bearer of when to be counted, 310. Special, 513, 514, 515. Notice, 451, 514, 516. Special, general, 443, 444. Vote, conclusiveness of chairman's declaration as to result of, 527. Votes at, 527-528. Voting — Executors, administrators, etc., 528. Joint holders of shares, 528. Loss of' voting rights where calls in arrear, 298, 513. Shareholders registered without qualification, entitled to vote. 457. Members May demand inspection, 5.35. Spe also ' <')ntario Act.' Memorandum of Agreement - Regulations as to, 4€. Repudiation of subscription by signatory of. 224, 225. Siirnatory to, becomes shareholder on incorporation, 785. Memorandum of Agreement and Stock Book, 224, 567. Memorandum of Association, 9. Minimum Subscription, 43, 174, 186. To be stated in prospectus, 174. INDEX. 921 Minorities Rights of, r)20-.'22. Decisions regarding, r)22ff. Right to sue company, o49. Minutes Directors' meetings, evidence of, 4S9. Minute Books, 45, 532, 533. Minute Book, of directors, 45, 480. Misrepresentation Shares, oil ohiaiiiins subscrU)tions for. See Prospectus, subscription, induced by, 790. See also ' Prospectus," ' Shares— Subscription.' Misfeasance, 8P>4-ST1. Auditors, by, 542. Costs, 870, 871. Defined. 866. Directors, of, 493. See also 'Directors.' Commissions, wrongfully receiving, 867. De facto directors, liability of, 870. Dividends, wrongfully declaring, 867 Interest, liability to pay, 870. Liahility of, 866ff. Limitation, 870. Remuneration, where unauthorized, 867. Liquidator may not take proceedings for, by counterclaimiug for damages, 833. Pecuniary loss to company must be shown, 866. Procedure, 870. Promoters, liability, 868, 869. Set-off, no right of, 870. Summary procedure for enforcing liability. 865. Mis-statements Si,Mr.s. hiMiniiiir subscriptions for. See Prospectus. Mortgage Bond mortgage described, 5. Books of company, whether included in general charse. 3W.. Calls, arrears of, 364. Foreign assets, 305. _ _ Quebec, province of, statutory provisions. :!.)7. ...jS. SoJ. Shares of, 341. See .shares, loans on security of. Uncalled capital, 364. , ,. S.M. jilsn. ' I'.Mrrnvviiii.'.- • I! Is,' 'Tnisl D-.l. ■ 1 ..w.ts. MortBagcs Inspection of copies of instruments creating. .{.»ii. Register of, to l)e kept by company. 355. Mortgages and Charges . (•„,,i.s of ev.ry instrument creating, to be kept at registered ofRce. 353 Entry of memornndum of sntisfacti rr.cist.r. ^54. 355. [YI'l INDEX. Mortgages and Charges Contiinitd Index to rogistor of, oaf). Mortgage inohules 'hypothec,' 357. Quebec notarial copies to be deemed originals, 357. Reetifu'atiou of register, 354. Kcgistraliun of i>artifulars of. 351-3. 398. Secretary of State to keep register, 352'. Mortgagee Of Shares, rights of, 341, 342, 343. Voting rights of, 172. Mortuiain Licenses in Mortinaiu under Ontario Mortmain, etc., Act. Fees for, 674. Procedure to obtain, 671-674. Power of company to hold lands, 20, 21, 88. 90, 91, 109, 110. Provincial legislation as to, 20. AfTec'tiii'^ Doiiiinioii c-onipiiny, 99. Muuicipal License Tax Liability of Dominion company to pay, 99. Name of Company, 33, 54. Application for incorporation, to be ret out in, 33. Certain names not granted, 34. Change of, see 'Change of Name.' Different from that i)roposed, granting, 33, 54. Exclusive use of, right to, 62. Incorrectly stated in contract, 131. ' Limited ' required to appear after name, 150, 151, 152. Neglect to keep painted or affixed, followed by word ' Limited,' pen- alty, 561. Objections to, 57. Ontario Act, provisions of, as to, see Ontario Act. Opposing granting of name, 58. Partial resemblance of names, 62. Sections referring to name, 57. Similarity of names, 59, 60, 61. Summary, name may be given to a new company, after failure to file, 555. Nature and Cliaracteristics of Companies, 48. Jiew Companies Formation of 14. Notes Personal liability of agents and oflBcers on, 147, 148. Notice Irregularities of, 367, 368. Of allotment, see 'Allotment.' Of granting letters patent, 54. Of intention to nominate auditor, 537, 538. Registered letter, proof of service of notice by, 560. Service on company, 533. On shareholders, 544. Time from which service reckoned, 544. Time of service of, 290, 291. • ixDEx. 923 Notice of Meetings Adjourned meeting, 527. By whom given, 518. Construction of, 517. Contents of, &14, 516, 517. Contingent notice, 516. Deceased shareholders, 516. De facto directors, given by, 518. Defective, 516, 517. Executors of shareholders, whether entitled to, 516. How given, 519. Length of notice, 518. Omission of, 516. Requirements of. 517, 518. Shareholders residing abroad, not entitled to, 516. Share warrant, whether bearer of entitled to, 516. Unauthorized, ratification of, 518. When deemed to be served, 519- See also ' Meetings.' Objects List of general object clauses, 36. Provincial, 15, 16. Statement of in application for incorporation, 34. See also ' Powers.' Offences and Penalties, .'")61. Office Head office, winding-up petition to be presented at, 114. Principal, notice of situation, 114. See also Head Office. Officers Appointment of, by directors, 453, 456. Authority of, to bind cidiipany by contract. l.'?3IT. See Contracts — Ofhcors — Agents. Balance sheet, issuing without auditor's report attached, 539. Liability of, 505. And see iJirectors — Liability — Misfeasance. Limited, penalty for failure to observe provisions of Act as to use of word, 561. Penalties for infraction of provi.sions of Act, 5(51. Penalty for making false entries in, and refusing inspection of books, 562. Pers(mal liability for omitting word 'limited' fmni bill of i-xchauge, 151. Remuneration, auditor's certificjitc as to, 543. Officcr.s, Agents, etc. Jliglit to recover for servic<'s wIkt"' iipipointiin'iit iiil"oi-m;il. l."!l. TmO. Offices. ri--'lit to ..^t •,1.lUIi. 11.";. Ill 924 i^^DEx. [Ont. Act. ONTARIO COMPANIES ACT Abbreviation Of word ' IJnuttHl ' in company's name, 609. Accounts Annuiil audit of, 656, 574, 577. Act Application of, 669. Administrator May vote at meetings, 621. Not personally liable, 622. Advertisement Capital to be correctly stated in, 640. Penalty for misrepresentation, 640. Of prospectus, abridgment of, 639- Allotment of Shares by Certain Public Companies Allotment, amount to be subscribed before proceeding with, 641, 642. Return of money subscribed on non-compliance with conditions ■within ninety days, 642. Times for compliance may be extended, 642. Waiver of compliance void, 642. Amount payable on application, 575, 642. Conditions precedent to, 575, 641. Non-compliance with, liability of directors in respect of money received for shares, 642. Money received from applicant for shares shall be repaid, 642. Waiver of compliance with, invalidity of, 642. Contracts made before entitled to commence business, 644, 645. Simultaneous offer of shares and other securities, 644. Contravention of provisions of Part VIII. respecting, liability in respect of, 642. Innocent non-compliance with former Act, 644. Irregular, effect of, 642, 643. Liability of directors in respect of, 642. Minimum subscription, 575, 638, 641. Moneys to be held in trust and on deposit until certificate issued, 645. Penalty for commencing business before proper time, 644. Proceedings to recover loss, limitation of time for commencing, 643. Restrictions on, 575, 641. Restriction on commencement of business nnd borrowing powers, 575, f>43. Certificate of Provincial Secretary. .">75, 644. Minimum allotment must be made, 575, 64.3. Payment of directors on shares, 575, 643. Proofs, 644. Return of, 576, 646- Particulars required to be given, 576, 646. Default in respect of, liability for, 646. Statutory meeting. 576, 646. 647, 648. Adjournments, 647. Application to Court in case of default in holding, 647, 648. Ont. Act.] index. 925 Allotment of Shares by Certain Public Companies — Continued. .Sratiitory Meeting — CoittiiiiK d. List of shareholders to be produced, 576, 647. Report to be iplication of Act Ennmer.'ition of companies, 661). Enumeration of companies. Common Law caiiacity, 670- 926 INDEX. [Ont. Act. Assets Distribution of, on ceasing to do business, 597. Confirmation by shareholders and by Lieutenant-Governor in Council, 59S. Assets and Liabilities To be shown and classes distinguished in balance slieet, 614. Association to Wliich Aid has Been Granted Limitation of number of shares to be held by shareholder, G17. Audit Certifying report of directors to public company, G47. May be provided for in Letters Patent, G02. Of accounts, 574, 577, 656. Auditors Annual audit by, of accounts, G56. Appointment of, 573, 574, 577, 657. Appointment of, may be provided for in Letters Patent, 602. Certificate of, on balance sheet, 657. Directors may fill casual vacancies, G57. Duties of, 657. May be shareholders, 657. Names and addresses of, in prospectus, 639. Provincial Secretary may appoint on default, 657. Remuneration of, 573, 574, 577. G57. Report of. to general meeting, 658. Report of, to shareholders, 614. Rights and duties of, 657. Authentication Of documents by corporation, 664. Balance Slieet Auditors to ascertain correctness of, 657. Certificate of auditors on, 657. To show classes of assets and liabilities, 573, 577, 614. Bills of Exchange General power of corporation to borrow on, not affected, 623. Bills of Lading General power of corporation to borrow on, not affected, 623. Board of Directors See Directors. Bonds Consent of holders of, to redemption, 625. For other than cash consideration, disclosure in prospectus, 638. Issue of, by-law for, 622. Mortgages securing, 625. Duplicate to be filed with Provincial Secretary, 625. Pledging of, by-law for, 622. Soliciting subscriptions, etc.. deemed to be offering to public, 633. Statf-mont as to, in annual summary, 658. Books and Documents Production of, 656. Liability for non-production, 656. Ont. Act.] index. 927 Books, Inspections, Auditors Part IX, Books of Account To be kept. .j74. 577. 655. Contents of, 655. Books of Record Application for correction of records as to shareholders and mem- bers by Court, 654. Appeal, 654. Costs, 654. Issue maj- be directed, 654. Question of title may be decided, 654. Audit of accounts to take place annually, 656. Appointment of auditors, 657. Auditors may be shareholders, 657. Certificates and report on audit, 657. Provincial Secretary may appoint on default of company, 657. Remuneration of auditors, 657. Rights of auditors, 657. Vacancies in office of auditors, how filled, 657- Books of account, how to be kept, 655. Books of record as prima facie evidence. 655. Books, what to be of record, 574, 577, 648. Penalty for removal, 648. Relieving company where meetings held out of Ontario, 648. Untrue entries, penalty, 654. AYhere to be kept, 648. Conditions upon which certain companies may be relieved from keeping in Ontario, 648. Contents of. 65."). Costs of proceedings under section i21 in discretion of Court, 654. Court not deprived of jurisdiction by section 121, 654. Decision of Court as to title of, 654. Entries in. powers of Judse as to, 654. Extracts from, may be made by interested parties, 655. Penalty for refusal to allow, 655. False entries in, penalty for, 6.54. False statements in returns, reports, etc., penalty for. 655. Inspection of, may be oruered, 656. Investigation. Tligli Court may appoint inspector, r»56. Books and documents, production of, 6.56. Corporation m.-iy ai)point inspector, f»5(i. Examining on oatli. f!56. Penalty for non-product inn or ri'fiisiil to answer, 656. Powers and duties of inspector, 6,")(i. Report of inspeetor, cxiienscs, 656. Minute book, to be kei)t, 655. Omissions from, powers of Judge as to, 654. Penalty for n-fus:;!! tp allow ins)ie(iion. 0.55, I'rodnction of, for e.\aminiition by inspector, 656. Penalty for non-produftion. 6."))i. Rect'fication of, powers of .ludge as to, 654. Shall lie k<-])t. 618. Contents of, 648. 928 TXDEX. [Ont. Act. Books of Record -Contiiniol. To bo kept at uead office iu Ontario, 048. Coiulitiuus upou which certain companies may be relieved I'lom, 648 Penalty for removal from Ontario, 648. To be open for inspcetioo, (m5. Liabilitj' for refusal to allow, 655. Sharelioltlors. etc., may make extracts therefrom, 655. To be prima farie evidence, 055. Transfers, entry of, 618. Restrictions on, 618. May be refused, 618. Borrovi^ing; Powrers By-law respecting, 622. Exercise of, conditions precedent to, 643. General powers not atfected, 623. Liability for exercising in contravention of, 644. Variation of, 598- Brokerage Object clause, authorizing payment, 603, 604. Payment of, 635. Buildings Construction, maintenance and alteration of, 002. Business Certificate allowing commencement of, 575, 644. Cancellation of, by Provincial Secx-etary, 644. Penalty for commencing before issue of, 044, 645. Prior contracts to be provisional, 644, 645. Restrictions on commencement of, 575, 643. Butter and Cheese Factories Limit of shareholder's holdings in co-operative manufacturing com- panies, 617. Innocent non-compliance with certain requirements, 648. By-laxes Allotment of shares, 628. Amendment of, 629. Appointment of chairman of Board of Directors, 627, 628. Approval of, by written consent of all the shareholders, 664. As to shares, dividends, directors, services, meetings, etc., 628. Confirmation of, 629. Bonds, issue of, 622. Borrowing money, 622. Capital, variation of, 598. Certified copies as evidence, 664. Changing number of quorum of directors and location of head office, 627. Confirmation of, by shareholders, 628. Publication of, 628. Conduct of affairs generally, 629. Confirmation of, by written consent of all the shareholders, 664. Confirmation of, fixing discount on mining shares. 605. Converting one class of security into another, 023. OxT. Act.] index. 929 By-la'ws — Von tin iied. Creating preference shares, 623. Confirmation by Supplementary Letters Patent, 624, , Creating and converting preference shares, 623. Debentures, issue of, 622, Debenture stock, 622, Directors may make, 628, Directors' qualifications, 628, Discount, 665- Dividends, 628. Evidence of, 664, Executive committee, 627, Fee payable on filing, 659. Regulation of, by Order in Council, 659, Filing of, payment of fee thereon, 664, For distribution of assets, 597, Confirmation of, 598. For applying for Supplementary Letters Patent, 598. Confirmation by shareholders or members, 598, iFor borrowing, issuing bonds, debentures, etc., 622, For payment of president or directors, 628, Confirmation of, 629. General powers of borrowing not afl'ectcd by, 623. Head office, change of location of, 627. Confirmation of, 628. Imposing conditions in letters patent as to. 602. Issue of debentures, 622, Shares at a discount, 665. Meetings, regulation of, 629. Not duly filed until payment of fee, 664. Payment of president or director, 629. Confirmation of, 629. Preference shares, (Ji'.'i. Terms of. 621. I 'urcha.se of shares in other corporations, 630. Exceptions, 630. Purposes for which directors' may make, 622, Confirmation of, 623. Rp-enactmeiit of, 629. Repeal of. 629. Securitie.s, issue of. ()L'2. Shares, iss'uc of, at a discdiint, hy-l;iw fur, 6t'>."t. Confiriuatinii of. (>(!."i. To be liled in I'io\ iiicial Secretary's oflice. <»(■>"). W-rifiration of. (Km. SuiipIcHK-nfary letters patent, 598. \'ari;ilion of capital. rti)H. ' 'oiifirniiition of. .">n8. Of niiinlicr of directors, 627. < 'onfirin.'ition of, 628. Py-law to be filed, 628. J'ublication of. 628, D.C-A, — 59 930 iNDKx. [Ont. Act. By-laws — ( 'o)itiii iicd. Whioli MKiy be iiiailc h.v (lircctors of coiniiaiiios. (!L'."!. rtiiilii-ination (if. hy sharolioldors, (>1'."!. \\'lu'n suiiploiiu'iitary lottors patent iHHinircd. Til' I. Whicli may ho inado by dirootors of coi'ikh ai ion, (!L'."'>. Confiniialion of, by siiarcholdcis ur iiiciidnTs, (iL'.'J. Calls Aotiou for sale of shares, on non-ici.s inent of, (>(')7. By directors, G19. By-laws rcgnlatius, G28. Forfeiture of shares for nun-paynieiit, (>-<.). Liability of transferee for unpaid, 618. Non-payment of, forfeiture of shares for, 620. Non-liability for. on niinins shares issued at a discount, 6f).""). Sale of mining shares for non-payment of, 606. Power of directors to make, 619. Prospectus to state time for, 638. Unpaid, interest sliall accrue on, 619. Validity of. questioned, 667. Capital Amount to be subscribed and paid in before increase allowable, 600. Advertisements must state correctly, 640. Penalty for misrepresentation. 640. Application for re-dividing of, 598. Creation of. in corporation previously without share capital, 587. Decrease of. preliminary conditions, 598. r>y-Iaw. confii-niation of. 598. Further issue of prospectus to raise, 641. Liability of directors in repect of, limitation on, 641. Increase of, preliminary conditions, 598. By-law. confirmation of, 598. Not to be applied in i)aynient of commissions except as authorized, 635, Providing for in case of amalgamation, 587. Rights of creditors preserved on reduction, 599. To be correctly stated in advertisements, 640. Variation of, 598. P.y-law. ciiiifirination of, 598. Caveat I^odging against (r.insfer of shares. 598. Certificate Auditor.s', on balance sheet. 657. Entitling public company to commence business, <'A4. Cancellation of, 644. Penalty for commencing business l)efore issue of, 644. Liability for false, 655. Share, held jointly by several persons, 617. Lost, defaced or destroyed, 618. That public comiiany entitled to commence business, 644. May be cancellerl, 644. Tliat person is a shareholder or member of corporation shall be received as evidence, 664. Ont. Act.] ixdex. 931 Certificate of Provincial Secretary That CDiiipaoy entitled to commence business, 575, 644. Charter See Letters Patent. Cheese and Butter Factories Limit of shareholder's holdings in, 617. Innocent uon-eompliance with requirements of certain sections, 648. Citation Of Act. ."71. Cold Storage Company Limit of shareholder's holdings in co-operative manufacturing com- panies, 617. Commencement of Business Certificate of Provincial Secretary, 575, 644. Ma.v be cancelled, 644. Shall be conclusive evidence, 644. Conditions precedent to, 575, 644. Contracts provisional until company entitled to commence business, 644. Contravention of section 114. liability for, 644. Innocent non-compliance with section 108 (1) of the Ontario Com- panies Act, 1907, 644. Liability of directors for contravention of Part VIIL. 641'. Minimum subscription, 575, 641. Money to be held in trust, 645. Preliminary conditions, 575, 643. Failure to comply with, liability in respect of. 614. Premature, penalty for. 644. Ilestrictious on, 575, 643. Times may be extended, 642. Waiver of compliance, condition requiring, to be void. 642. Commissions ilruUi'rage, may be i)aiii. <(■'!•». Cai)ital not to be applied in iiaynicnt of. except as authorized, 635. Disclosure of, in prospectus, (J^i8. P:i.\ meiit of. <>.")5. Authorization of. 6.'>5. Disclosure in pmsjiectus, 6.''S. Objects, clause antliorizing. 6(>;!, (KM. StaliMient of, in pros'pectus, 6i>.S. Companies Ai)plication of Part VIIL to. <»4L Offering shares for public subscription. Part \ III., till. Ri'gulations as to. to be m.'ide by Order-in-Council, (lOO. Pul)lication of, 60i). Tip which jiid is granted, limitatiun :is [,. number of shares to be lirld l)y one shareholder. 617. To whirh this Act apjilies, frdfl. What, must file i)rospoctus. !». 932 INDEX. [Ont. Act. Coiupauy — < 'o;/ 1 in ind. l>ofiuitii)n of torni. HTl. In siH'tious I'olatiii.ii to prospectus, 633. Contracts l>i rectors uot to vote on certain, 030. lOxceptions, 630. Fiiin,u' of, in dopiirtmont, 576, C>46. I'rovisional until company entilk'd to conuucuee business, 644. Modification of. by statutory meetinp;. 647. Obligation to disclose material contracts limited, 639. Contribution Kccovcry of, by director from co-director, 641. Conversion Of corporation without share capital into company with share capital, 587. Conlirmation of by-law, 587. Of capital into shares, 587. Of one class of security into another, 623. Co-operative ("lict'se and butter manufacturing company, limitation of number of shares to be held by one shareholder, 617. Cold s-torag'c company, to which aid has been granted, limitation of number of shares to be held by one shareholder, 617. Departmental instructions as to, 588. Corporate Existence Termination of, where not incorporated by letters patent, (i08. Corporation By-laws which may be made by, 622. Common law capacity, 669, 670. I>efinition of term, 571. Incidental powers' of, 602. Incorporated otherwise than l)y letters patent, termination of exist- ence of, 606. With less than five members, personal liability of shareholders, 606. Without share capital, conversion into company with sliare capital, 587. Confirmation of by-law, 587. Court Not deprived of jurisdiction, 654. Powers of, in — Not interfered with, 654. On application of s'hareholder for winding up after default lu holding statutory meeting, 647. Creditors Rights preserved on re-incorporation or amalgamation, 597. Of, pre.s'erved, on reduction of cai)ital, 599. Of, not affected by forfeiture of corporate powers, 605, Date Of prospectus, 638. Debentures See Preference and Debenture Stock. OxT. Act.] index. 933 Debenture Stock See Preference and Debenture Stock. Decrease of Capital Preliminary conditions. 598. Demand Service of, 6(>4. Proof of, 6&i. Time of. 6G4. Directors and Their Powers Part VI. Directors Annual report by. to shareholders, (»14. Assignment of jmlgment to, on payment, 632. Authorization of, to purchase shares in other corporations, 630. Board of, to be not less than three. 626. Business must be transacted by quorum, 626. By-laws — Company may vary or repeal, 629. Confirmation of, by company, 629. ^ For borrowing money, issuing bonds and debentures, 622. Generally, 629. Meetings of company, 629. Remuneration, 628. Varying number of, or fixing quorum of, 627. Confirmation of, by shareholders, 628. Calling first meeting of company not offering shares, etc., to public, 613. General meeting of other companies. 646. Calling s'pecial meetings on requisition of shareholders, 613. Meeting when no quorum, etc., 626. Casual vacancies, how filled, 626. Closing of transfer books pending distribution of dividend. 619. Co-director, contribution from, (Vll. Compensation by, on violation of provisions as to allotment, 642. Continue in ofiico until successors are elected, 627. Declaring flividend when company ins'olveut, not to, 631. Liability of, 6.31. M.iy be avoided, (h'A. Declaration of stock dividend by, <).32. Election to be annual, 627. Failure of, how remedied, <'»L'7. Retiring director eligible, (;l'7. To be by ballot, 627. First, wlien to be held. 62r>. Elect president, 627. Executive commiltee, 627. To be snibject to regulations of board, 627. Failure to elect, provision for, 627. False entries in books of company. 6,T1. First election of, 62"». Fill casual vacancies in office of auditor. i'tTtl. fleueral powers to mortgage or pledge property and securities, 62.'i. General [)ower.s to pass by-laws, 628. 934 INDEX. [Ont. Act. Directors — Can tin iicd. liuii'iunit.v to pci-sDii iiupruiiL'rl.v luuiiod iu prospectus, G41. Contribution fimn co-director. 641. liiltM'ost of. on contracts, to be disclosed. (i.'?0. Liability for declaring dividend when company insolvent, (l.'?l. Makius' loans to shareholders, (5.'il.*. Statements in prospectus, (»40. Exceptions, fi40. Of. for wages of laborers, servants, etc., 632. Conditions precedent to, 632. Limitation of certain actions auainst, 643. Manner of selecting:, 625. May charge property, 625. Confirmation of by shareholders', 632. Declare stock dividend, 632. Direct that no entry of transfer be made for two weeks preceding payment of dividend, 619. Hypothecate property, 625. Make b.y-laws respecting, etc., 628. Conduct of affairs generally, 620. Directors' services, etc., 628. Directors' qualifications, etc., 628. Dividends, 628. Meetings, 629. Qualification of directors, 628, Shares, 628. May Mortgage property, 625. Neglect to make return as to allotment, 646. None in office, calling of meeting to elect, 627. No loan by comi)any to shareholder, 632. Not to vote on contracts' where personally interested, 630. Purchase shares of other corporations unless authorized, 630. Exceptions as to company dealing iu shares, 630. Number of, 626. May be varied, 627. Confirmation of by-law, 628. Filing of, 628. Publication of, 628. Payments of dividend when company insolvent or payments out of capital, 6.31. How liability may be avoided, 631. Payment to, 629. Penalty for contravention of provisions re mining company, 667. Relief from penalty, 667. Penalty for violation of provisions as to iss'ue of prospectus, 640. President and vice-president, election of, 627. Prospectus to rai.se further capital, statements in, 641. Provisional to be first, 625. Purchase of shares in other coriiorations, 6.30. Qualification of, 627. 628. Arv d remuneration to be stated in prospectus, 638. Quorum, definition of, 626. No directors, calling meeting when, 627. XT. Act.] index. 935 Directors — Cotitinucd. Refusal to permit inspection of books, liability for, 655. To permit extracts from, 655. Report to first meeting of private company or of companies not offering shares, etc., to the public for subscription, 613. Report to shareholders of public company, 646. Returns as to changes in directorate, 574. 577, 657. Penalty for not making, 057. Rules as to issue of new share warrant. 6L'0. Shall appoint officers. 027. Statements in prospectus to raise further capital. 641. Of interest in property proposed to be acquired, 639. Stock dividends, 6.32. To have no effect until confirmed by shareholders, 632. To be not les« than tliree, 626. Transfer of shares, consent of, when required, 618. Liability of. for transfer to persons without means, 618. Relief from liability by entering protest, 618. Refusal to register a transfer of shares to indebted share- holder. 618. Vacancies, how filled, 626. Validity of by-laws passed by directors until confirmed by share- holders, 629. Voting on contracts when personally interested, 630. Disclosing interest and refraining from voting. 630. Exceptions as to contracts of indemnity, 630. Wages, liability of directors for, 632. Liability of directors for, 632. Limitation of, 632. Yearly election of, 626. Discount IssMi- of shares' at a (mining company) OtM. Dissolution Ciiiic-llation of letters patent. 005. Forfeituco of letters patent, 605. Surrender of letters patent by corporation. (UUl. Termination of existence of corporation not incorporated by let- ters patent, (508. Distribution of Assets On rcMsiii;; to do bu.-iness. 597. ('(.ufiniiation by shareholders. 598. Dividend i;\ laws regulating. 028. Directors may '''2. Confirmation of, f>32. 936 INDEX. [Ont, Act. Docuiiieuts Autlioiitioation of, 064. False stateinoiits in pnisiuH-tiis, liability for, 640. Filiiiii' of. not. i'oiiii)loto until iiayiiieiit of foo, 0(54. Issncii by comijany, i-aiiital to be corroetly stated in, t>40. IVualty for inisrei)resentation. (MO. Production of, to inspector, r>5(». Liability for non-production, 656. Required by this Act, liability for false, 655. Restrictions on filinir. before payment of tee, 659. Elections Of chairman of meeting, 615. Directors, 627. President, 627. Eiuployees Liability of, for false statements in advertisements, etc., 640. Directors liable for wages of, 032. Evidence Of by-law, 004. Certificate that person is a shareholder or member of corpora- tion, 664. Executive Committee Of directors, 627. Executor May vote. 621. Not personally liable, 622. Existence of Corporation Date of commencement of, 602. Incorporated otherwise than under letters patent, termination of. 608. Expenses Statement of preliminary, in prospectus, 6.S8. Extra-provincial Corporation Departmental instructions for obtaining license, 675. False Statements In advertisements, etc.. liability for, 640. Returns, reports, etc., 6.55. Fees Of Provincial Secretary's Department, to be fixed by Ordcr-in- Council, 059. May vary in amount, 059. No service to be rendered till payment of, 059. Payment of, on document filed. 064. Fiduciary Holder May vote on .s'hares held by him, 621. Not personally liable as shareholder, 622. When beneficiary al.so liable. 622. Liability where beneficiary not named, 622. Filing of Documents Not complete until payment of fee thereon, 664. Foreign Companies. See Extra-provincial Oorporation. OxT. Act.] index. 937 Forfeiture Of letters patent for non-user, 605. May be ordered by Lieuteuant-Governor-in-Council, 605. Kishts of creditors preserved. G05. Revocation of, by Order-in-Council. 605. Of real estate, 605. Of shares, for non-payment of calls. 619. General Meeting See Meetings. Gnardian May vote, 621. Not personally liable. 622. Head Office All meetings shall be held at, 617. By-law changing location of, 627. Confirmation by shareholders, 628. Publication of, 628. Books to be kept at, 648. Location of, 580, 581. Change of, preliminary conditions, 627. Penalty for removal of books from, 648. Incidental Powers Of company with share capital, 602. May be withheld, 602. Of Corporation. 602. Incline Railway Not to be incorporated under Act. 578. Increase of Capital I'nliiiiinary conditions, 598. Incorporation By letters patent, 578. Change of propo.sed name, 580. May be iss(ued by Provincial Secretary instead of Lieutenant- Governor, 578. Number of .-ipplicaiits. 578. Objects excluded. 57S. Who to be first members, 578. Company with capital divided into .shares, 578. AgnM-ment, memorandum of, 578. Dei.artmental instructions for obtaining incorporalion. 578. Petition. 578. Contents of, 57H. Form of, 57!>. May ask insertion in letters imteni of any provision wliich migiit be embodied in by-law, 581. Petitioner for, bona fide bolder >>f sliiires, 57!). Powers incidental to, 580. May be withheld. 602. Private company, cfjndilions to be in-ci t,,!, ."SI. Corporation witliont share capital. .'•84. Agreement, memorandum of, 585. Contents of. 585. .5K<5. Sh'.rt f.oin, .586. 938 INDEX. [Ont. Act. lueoi'porntiou -('mi liii in il. L'(ii'|iiir,ition \\itliciut sluiri' (•■ipitjil — ('(Uifiiiiiiil. Caiiitiil. crcalioii of, .IST. Departiiii'iital iiistriictidiis for ulitainiii); iiicdrpdial idii. rt84. IV'tition, cDuti'iits' of, r>.S4. RoS'uIatioiis ill inouioraudiuii. clVi'tl of, .">S(>. Conversion of private eompau.v into public company. oilT. ?!xn»4>Jeni('ntar.v letters patent, H!)?. Statement in lieu of prospectus, f)!)!. Creation of share capital b^ corporation incorporated witliout, 587. Date of, 602. Name, cliauiie of i)roposed, 580. Ni)tice of granting, (JOli. Powers incident to comi)any, ()02. I'reliminary conditions. (102. !Sui)plenientary letters patent, 598. Confirmation of By-law by shareholders, 598. I'urijoses for which they may be issued, 598. Ivcduetion of capital, rights of creditors, 599. Restriction upon increase of capital, 599. When existence of corporation to begin, (;()2. Insolvent Company J.iability of directors in declaring dividend when company insolvent, 631. Inspection of Books By shareholders, etc., 655. Liability for refusal to allow, 655. Inspector Appointment of, by corporation, 656. By Court, 656. Appoiuinent of, may be provided for in letters patent, 602. Investigation by, 656. Costs of, 656. May examine upon oath, 656. Production of books and documents to, 656. Penalty for non-production, 656. Shall report to Court, 656. Instalments Calling in, 619. Insurance Corporations .May not be incoriioratcd under this Act, 578. Interpretation " Company," 571. "Corporation," 571. " Private Company," 571. " Public Company," 572. Issue Of .shares at a discount, 665. Investigation Of affairs and management by Inspector, 656. Report on, to Court, 656. OxT. Act.] index. 939 Joint Holders Of share certificate, issue of certificate. 617. Of Stock, voting power. 621. Voting on shares held, 621. Judge Decision of. as to title, 654. Discretion of Court, as to costs, 654. Powers of, as to entries in books, omissions, rectifications, etc.. 654. Land Extension of time for holding, G05. Power of corporation to acquire and hold, 603. Restrictions on holding, 604. Forfeiture for breach of, 605. Statement of, to I'rovincial Secretary, 605. Lessor When term included in term " vendor." 639. Letter-head Capiial ti) be correctly stated in, 640. Penalty for misrepresentation of, 640. False s-tatements in. liability fur. tIMi. Letters Patent Amendment of. 598. Cancellation of, 605. Certain informalities not to invalidate, 605. Conditions with respect to by-laws of corporation or any aiaend- ments thereto may be imposed in, 602. Corporation deemed to exist from date of, 602. Date of, to be date of incorporation, 602. Defect in, not to invalidate, 605. Forfeiture of, 605. For incorporation, 578. K<-incorporalion of existing corporation, 597. Imposing conditions in, 602. Informalities not to invalidate, 605. Noii-u.ser, forfeiture of, for, (Xl5. Notice in (Jazette of granting, <;()2. Not to issue before payment of fee, 659. Powers of company incidental to, ('/)2. Willilioldiiig on issue of, (K»2. Powers (jf cori»oration ineiileiitnl to, 602. Provision in for appointment <>\' aiidilur \>y I'rovincial S.'cretary. »X)2. Regulations respecting api)iications and /orms, (>09. Revocation of, by Lieutcnant-(!<(vernor, (>05. Sharcliolders less than five, 60y, 608. Liability (»f ilirectors. See Director.H. 9-40 INDEX. [Ont. Act. Liability — VontiiiKcd. Ul" iliroL'tors — Von tinned. Shareholders. See Shareholders. Persons named in prospectus, 040. Uiuirr som-ral law not affected, MO. Limited Abbreviation of word in company's name, 609. Penalty for default to comply witli section 34, (ilO. Last word in company's name, 009. Exceptions, 009. Use of word by company, 009. Penalty for using word without authority, (i09. Limitation , Of certain actions against directors, 043. Loan May not be made by company to shareholder, 03!i. Loan and Trust Corporations May not be incorporated under this Act, 578. Meetings of Company Administrator may vote at, 621. Adjournment by consent, 015. Annual, calling of, 573, 577, 614. By-laws regulating, 629. By-laws as to, 029. Calling of, where quorum of directors not in office, 626. Where no directors in oflice, 627. General, of shareholders or members, may be provided for in letters patent, 602. Casting vote at general, 016. Declaration as to carrying of resolution at general. 615. Depositor of share warrant, right of at, 021. Executor may vote at, 621. First, of private company or company not offering share lo public, 573, 613. Report to, 573, 613. Sliareholders may call, 613. General. 046. Adjourned, resolution of which notice has been given may be passed, 647. Adjournment by consent, 615. Chairman, casting vote in case of equality of votes, 616. Election of, when necessary, 615. Notice of, 613. President shall preside at, 015. Presiding officer, 615. Guardian may vote at, 621. Notice of, 613. Of private company, or company not offering shares for subscrip- tion, 613. Of shareholders, to fill vacancies on board of directors. 626. Place of, 577, 014, 617. By-laws regulating, 029. Procedure at, by-laws regulating, 629. Ont. Act.] index. 9-41 Meetings of Company — Continued. Proxies, requirements as to. G16. Quorum of directors not in office, calling of meeting when, 62G. Resolutions, evidence of passing, 615. Taking a poll, 616. Casting vote, 616. Requisition of shareholders for. 61o. Depositor of share warrant, right to sign, 621. Shareholders in arrear. not to vote at, 616. Special, calling of, by directors on requisition of shareholders' or by directors on their own motion, 615. When quorum of directors not in office, 615. Notice of, 615. Statutory, df public company, when to be called. 576, 646. Adjournments, 647. Application for winding up, fi»r not bt)ltliug. 647. Business of which notice has been given may be transacted, 647. Default in holding. 647. Discussion by shareholders at, 647. List of shareholders to be produced. 576, 647. Report to shareholders prior to, 570. Contents of, 646. Shall be signed by auditors, 576, 647. Copy shall be filed with Trovincial Secretary, 576, 647. Default in filing. 647. Resolution of which notice has not been given shall not be passed. 647. Taking vote when poll is deinamled, 616. Time of holding, by-law* regulating, 629. Voting power of shareholders at, 616. Wilt) to jirosido at, 615. Memorandum of Agreement As to incorporation of company with share capital, 578, 579. Without share capital. 5.S-I. .5,95. Regulations in, application to corporation without share capital. 586. Varying objects or terms in, 586. Mining Companies Annual summ:iry. ()58. By-laws for issuing shares at a discount, 665. Verification and transmission to Provincial Secretary, 605. Call, non-payment of, (V)C>. Notice of sale, contents of, 6(jt!. Discount, issniing of shares at, a. <>(»5. By-law, authorizing and fi.xing rate of, t><»5. Verified citpy ti> be transmit led ti> rrovincial Si'it.-Imi-x . ('.i;5. Sliarcholders not personally lialilc for calls. 0(>5. Dividends, special provisicm as to paying nut of funds, (wil. Appri'ival of sliJireholdcrs, 6.'{1. How far capital may be impaired, 631. Issue of shares at a tlisconnt. 665. Confirmation of by-law, 665. To be filed in Provincial Secntnv'.; office, 665. Verification of by-law , 605. lU'J INDEX. [Ont. Act. Miuiu;;; Companies —To/i ///(»<(/. ■■ No porsoiial liability " to ainnar ou documents issued by company, 666. ronally for miitravciitioii of ]'art XI., (i()7. Sale of shares for non-payment of call, GOG. Notice of sale, G66. Share certificates to read " subject to call " or " not subject to call," 66G. Use of words " No personal Liability,"' " subject to Call," and " Not Subject to Call." 666. Minutes of Proceedings Vorilicatiou of, 655. ' Money Deposit in chartcrod i)aidv until issue of certificate that company may conunenco business. G4.j. Mortgage To secure debentures, 625. Holder of, conditions under which he may vote, 621. Shall be filed with the Provincial Secretary, 625. Mortgagee of Stock Not personally liable prior to foreclosure, 622. Mortgagor of Stock May empower holder of mortgage to vote, 621. May vote. 621. Municipal Franeliises and Public Utilities, Part XII. Application, 582. Material to be produced before incorporation, 582. Name of Corporation Abbreviation of, 609. Change of, by Lieutenant-Governor, 586. Change of, if objectionable, 610. Application for, 610. Departmental instructions, 610. Not to affect rights or obligations, 612. Notice of, in Ontario Gazette, 612. Rights of creditors preserved, 599- Forfeiture of. 610. " Limited," last word in, 609. Abbreviation of, 609. Penalty for default in respect of, 609. Limitation of prosecutions, 610. May be continued (by new corporation with consent of subsisting cor- poration. 610. May be given to new corporation on failure to make annual returns, 610. Must be free from objection. 579. Objection to change of, by order, 610 Change of proposed, 610. Of Corporation which has not for three years made annual summary, ma.y be given to new corporation, 610- Of subsisting corporation, may be granted to new corporation, 610. Proposed, change of, by Lieutenant-Governor, 586. OxT. Act,] index. 943 Name of Corporation — Continued. Use of words " No Personal Liability," " Not Subject to Call," and " subject to GaU," 666. Non-user Forfeiture of powers in charter for, 605. " No Personal Liability " See Mining Companies. Notice Atithentication of, 664. Manner and time of service of, 664. Of general meetings, 613. Of Lieutenant-Governor, etc., certain informality not to invalidate, 605. Of sale of shares for non-payment of calls, 666. Ontario Gazette, change of head office, 628. Change of number of directors, 627. Letters patent, 602. Supplementary letters patent, 602. Regulations respecting companies, 609. Service of, 664. Proof of, 664. Time of. 664. Oaths Evidence nnder. may l)e taken by Provincial Secretary or any officer to whom applications may be referred, 602. Objects of Company See Powers. Offer of Shares Application of Part VII. to, 634. Payment of commission on. 60."^, 604. ti.'!."). OfBcer Appointment of, 627. Liability nf, for false entries in company's books, 654. For loan made by company to shareliolder, 632. Order AtitlicntiraliMii of, 6(51- Of Lieutenant-Governor, certain informalities wot to invalidate, iM)'}. Part I. liH'di poriiMuii. Ile-iriroriMiralinii ;uid .\inalg;iniation, 57^. Part II. Name of Cdrporation, 60n. Part III. MietiiiKs of Company. Ol.l. Part IV. Shares, Calls. CI 7. Part V. I'refiTeiiee and [»ebonture Stock, Dehenturea and MortKago.i, 622. Part VI. I»ire, dl-'. Petition for incorporation, conditions to be inserted in, .")81. Use of words on seal and share certificate, 610. Statement in lieu of prospectus not to niiply to, 638. Proniifisory Notes Grencral power of borrowing on. not afft.'cted, 623. Promoter Detiniliiiii <»f, 641. Remuneration of, to be stated in prospectus, 638. Proofs Of matters under this Act, 602. Prosecutions Under Section 10.5 I'lvreption.i, f>40- Liability under general law not affected, 640. n.c.A.— 60 946 INDEX. [Ont. Act. Prospectus and Directors' Liability Ailvertisin.u: in ncwspnixM-. 1)39. Applicntitin to siilisciniout issues, 639. Application of Part VII., 634. Contribution from co-director, 641. Datinu', siRuine: and filing of. OHS. Delivor.v of copy before subscription, 637. For raising further capital, statements in, 641. ludenmit.v of person whose name has been improperly inserted, 641. Issuing and filing of, 638. Liability for statements in, 640. Of persons named in, 64G. Meanin;; of company, 633. Meaning of prospectus, 633. Penalty for neglect to coni])ly with provisions as to, 640. now exoneration from, obtained, 640. Other liability not affected, 640. Prospectus, abridgment of, in advertisement, 639. Companies Avhich must file, 636. Date of, 638. . Definition of, 633. Filing of, 638. Provincial Secretary shall not file until signed and dated, 638. For raising further capital, 641. Liability of directors, 640. Issue of, not until filed, 638. Liability for statements in. of directors, 640- Prospectus, indemnity where name has been improperly inserted, 641. Under general law not affected, 640. Particulars to be disclosed, 638. Amount payable on each share, 638. Auditors, 639. Bonds, etc., allotted, 6.38. Calls, time of, 6.38. Commissions paid, 638. Consideration for purchase, 638. Directors, interest in property taken by company, 639. Names, etc., 6.38. Qualification and remuneration, 638. Payments to, 6.38. Incorporators' names, etc., 638. Material contracts, 639. Minimum subscription. 638. Preliminary expenses, 638. Previous allotment, 638. Amount actually allotted, 638. Amount offered for subscription, 638. Promoters' remuneration, etc., 638. .Shares allotted for other than cash consideration, 6.38- Stibscriptioii ujion whicii allotment may iiroceed. 6.'!H. Time at which calls rnay be made, 638. Vendors of property to company. 6.38. OxT. Act.] index. 947 Prospectus and Directors' Liability — Continued. Published more than one year after first general meeting, certain requirements shall not applj'. 639. Purchases and subscriptions deemed to be induced, 636. Statement in lieu of, 638. Subscriber for stock .shall receive copy of, before subscription, 637. Subscription not binding otherwise, 637. Waiver of compliance void, 640. What to be deemed offering shares to the public, 634. What to bo disclosed in, 638. Provincial Secretary Taking evidence in connection with applications, 602. What powers exercisable by. 578. Provisional Directors See Directors- Proxy Appointment of, in writing', 616. Deposit of, time within which, ()16. Form and revocation of, 616, 671. Not to vote on show of hands, 616. Qualification of, 616. Shareholders may vote by, 616. Public Company Al'-otnient. restrictions on. .")75, 641. Compensation by directors for contravention as to, 642. Action to be brought within two years, 643. Effect of irregular, 642. Minimum subscription prior to. ~>l~y, 641. Commencement of business, restrictions on. 575, 643. Certificate of Provincial Secretary. .")75. (U4. Penalty for commencing before issue of, 644, Meaning of, 572. Moneys received to be held in trust, 645. Procedure in nri,'anizatinn of. 574. Ilctnni of allotments to Provincial Secretary. 646. Penalty for not making, 646. Statutory meeting of, 576. 64r(. .\(Ijournniont of, 1S. Real Estate Forfoiture of, G05. Period (hiiiui;- which cerUiin lands may be held, 604, 605. Extension of, 604, 605. Powers of corporation in respect of, 003. Restrictions as to holding, 604. Statement of, shall be supplied to Lieutenant-Governor when re- quired, 605. Reccnstruction. HO.*!. 594. Regulations In memorandum of agreement where no share capital, 585. With respect to company matters, by Order-in-Couueil, tiOD. Publication of, in Ontario Gazette, 009. Re-Incorp oration Extension of powers on, 597. Name may he changed, 597. Rights of creditors preserved, 597. Report By directors to shareholders before annual meeting, 573, 577, 614 Liability for false, 655. Of Auditors, to shareholders. 657. Reading of, at general meeting, 658. To shareholders of public company, 576, 046. To shareholders of private company, 573, 613. Of public company, 576, 646. Application to wind up for default in filing, 647. To 'be certified by Auditor and filed with Provincial Secretary, 576, 647. Requisition For general meetings. See Meetings. Resolution Of wliieli notice has been given may be passed at adjourned meet- ing, 647. Procedure as to, 615. Returns Annual summary of corporation, what to contain, 658. Penalty for default, 658. To be posted up in head office, 658. Transmission to Provincial Secretary, 658. When not required, 658. Authentication of by-laws, certificates, etc., 664. By public company, as to allotment of shares, 576, 646. Penalty for not making, 646. Notices, demands, etc., service of, 664. Penalty for false statements in, 655. Proof of matters required under Act, how made, 664. Requiring on any subject by Provincial Secretary, 059. Tender of. not to be compliance until payment of fees, 059. To I'rovincial Secretary, as to cliange in directors, 058. Penalty for not making, 658. Ont.Act.] i^^dex. 949 Revocation Of letters patent, 605. If shareholders less than five, 606. Rights of Creditors Preserved in amalgamation, 597. Change of name, 586. Forfeiture of powers in charter for non-user, 605. Re-incorporation, 597. ^^*'use of words "No Personal Liability," "Not Subject to Call," and " Subject to Call," on, 666. Use of words " Private Company," ou, 610. Securities By-laws for issuing, 622. Conversion of one class into another, 623. Issue, pledging or selling, 622. Mortgages securing, 625- . . , c. ^ ro-*- Approval of by-law by written consent of all, 6W. Auditors, may be, 657. ^ * n roi Confirmation of by-law by written consent of all, 004. Entitled to certificate of shares, 617. Rights, if certificate lost, 618. Executor may vote as, 021. Not per.sonally liable, 022. Guardian, may vote as, 021. Not per.sonnlly liable, 022. In arrear. not to vote at meetings. 010 Inspection of hooka of record by, 055. Liability to creditorn, on reduction of .-ni-'tMl. . ..>.». 97)0 INDEX. [Ont. Act. Shareholders — CoiitiiniriL Liability for debts whoro loss than five, OOfi. How sliaroholdor may exonera'o liimsolf, OOO. ' Liability of. for call, until shares paid up, 622. Right of set-off, 622. Liability of shareholders : — In respect of " no personal liability " company, 665. In respect of shares forfeited for non-payment of call, (il^t). Limit of holdings in co-operative, cold storage, cheese and butter companies, 617. List of, to be produced at statutory meeting, 576, 647. Discission of business by, at statutory meeting. 647. Loan to. may not be made by company, (io2. Liability in respect of, 632. Way vote by proxy, 616. May apply for winding up, on default in holding statutory meeting, 647. May call first general meeting, 613. May make requisition for special general meetings, 615. May convene special general meeting, 615. Mortgagees, prior to foreclosure, not personally liable, 622. Mortgagor oi stock, voting power, 621. Non-liability for acts, defaults, etc, of company, oJ.2. Not personally liable, for calls on mining shares issued at a dis- count, 665. Prohibition as "^o making loan to, 632. Receipt of, shall he discharge to company, 621. Revocation of charter where less than five, 606. Right to vote, of fiduciary owner, 621. Although shares hypothecated, 621. Of joint holders, 621. Set-off of, 622. Submission to, of agreements for amalgamation, 588. Submission to, of by-laws to vary powers, etc., 598. Trustees may vote as, 621. Not personally liable, 622. Shares Allotment for other than cash consideration, disclosure of in pro- spectus, 638. At a discount. Part XL, issue of, 665. By-laws respecting, 628. Caveat, against entry of transfer, 619. Calls, right of directors to make, 619. Demand to state liability to forfeiture, 619. Forfeiture for non-payment, 620. Interest on, when unpaid, 619. Validity of, questioned, 667. Certificate of. mining company, 666. Certificates, shareholders entitled to, 617 Issue of, when defaced, lost or destroyed, 618. To be pHmar in rospcot of calls, shall not have right to, 616. Trustee, as a shareholder, 621. Wages Liability of directors for 632. Organization of Company Books, 45. Commencement of business, 45. Meetings, 42. Minimum subscription, 43. Procedure for, 42. Purchase of property upon, 44. Transfer agent, appointment of, 44. IJiHluiremcnts of. 341). Par Value Sliares witliout. 7. 30, 31, 47. 48. Part I. Application of, 2. Part III., 564, 565. Parts IV.— VI., 565. Partnership 1 >istiii,guisli(;(l I'nini CDiniiany, 4i), .11, ~t'2. Entry of. in register of shareholders, 347, 348. Past Members Liability nf in \vinding-u|). 798. Penalties, 561 Annual summary, for non-conipiiinicc with rciiuii-cmonts as to, 554, 556. Balance sheet, issuing without auditor's report attached, 539. Bonds, default in sending particulars of to Secretary of State, 355. Bonds or debenture stock certificate, issuing, without copy of certifi- cate of registration endorsed, 355. Books, false entries in. 562. Refusing inspection of, 535, 562. Concealing name of creditor on reduction of cai)ital, 267. Copies of register of debenture holders and of trust deed, refusing to fnrni.sh. .356. Directors, sections impo.sing, on, 498. For act contrary to provisions of Companies Act, 561. For default in notifying Secretary of State of appointment of receiver, 354. For neglect to keep painted or afhxed name of company followed by word ' limited,' 561. For refusing to produce books and answer questions on examina- tion by inspector, 563. ixDEX. 955 Penalties — Continued. Inspection, refusing, register of mortgages and copies of instru- ments creating mortgages, 356. Mortgages or charges, for (Icfault in sending particulars of to Secre- tary of State, 355. Mortgages and charges, not registering, 355. ■ Receiver, for not filing accounts with Secretary of State, 394. Register of holders of debentures, refusing inspection. 350. Register of mortgages, kept by company, failure to make ro(iuired entries, 355. Seal, not liaving word ' limited ' on seal, 561. Petition for Incorporation Form of, 5(i5. Infant a petitioner, 12. See also ' Application for Incorporation.' Place of Residence Of corporation, 11-1, 115, 548. Pledgee Voting rights, 172. Pledgor Voting rights, 172. Poll At meetings, 530. Powers Acquire, hold and dispose of land, 1(»1), 110. Agents, to act through, 133. Ancillary, 103. Banking, not to engage in, 14. Borrow money. I'Mj. Sec also ' Borrowing.' Cancellation of shares, 109. See al.90 Sliares. Capacity at common law, !)1. Capital, reduction of. HI. See also ' Capital.' Conii)romise disputes, 103. Conferred by Interpretation Act, 94. Constitutional limitations. 12<». 121. Contracts, to mak.-, 105. 100. 11!>IT. l)ilegation of, 90. Directors, of, 53, 94, 95. Restriction of, 53. See also Directors. Exercisal)!*! by comity, IS. 27. Exercise of, 95, 9f!. Confined to one province. 'SA. 21. Illegal nct«. 9.".. In contravention of statul<'. 92, 9.!. Express, 9. Express' powers, conferred by Act, 9.;. 91. Further powers, 152, 153, 154. General capacity n.nferr'd by Ontario A- 1 Ml 956 INDEX. Powers — Cttntiii iird. (.iouorul corporate capacity, 92. General powers couferred by Act, 88. Nature and extent of, SSff. nuaraiitro to, W, 104. 105. linplit'd. !). Incidental powers, 103. Insurance, none to engage in, 14. Interest, to pay, lOS. Interpretation Act, 3, 4. Issue ne.iu'otiable instruments, to, 148. Issue shares at a discount, not to, 109. Land, to acquire, hold, etc., 20, 21, 88, 90, 91, 109, 110. To purchase, 98. To lease lands, 105, 106. To sell lands. 110. Lend money, 108, 109. Lend on mortgage, 107. Loans to shareholders, forbidden, 88, 92, 95, 506, 507. Mortgage, to, 106, 107, 370. ■Taking, to secure purchase money, 110. Necessarily incident, 94. Paper money, not to issue, 14. Primary object rule, 100. Exclusion of, 101. Principles applicable in determining, 1(X). Provincial legislation affecting Dominion companies, 96-99. Provincially incorporated companies, 15. I'urchase assets of another company, 113. Real estate, acquiring, holding, etc., 20, 21, 88, 90-1, 93, 105-6, 109-10. Reduce capital, 111. Repurchase shares. 111. See also ' Shares.' Rps'trictions, statutory, 92. Rule as to, applicable to companies, under Part I., 88, 80. Sell lands, 110. Sell undertaking, 106. Shares in other companies, to hold, 217, 218, 219, 220. Statutory corporations, rules applicable to. 100. Statutory restrictions, 92. Sue and be sued, to, 94. Transmiss'ion of, 96. Transfer of shares, power to restrict, 113. See Transfer of Shares. Ultra vires, doctrine of, not applicable to companies incorporated by charter, 89. Varying powers, ]r)2, 153, 1.54. Warehouse receipts, to give, 112, 113. Winding-up, continue notwithstanding, 731. Sep also ' Objects.' Preference Shares By-law to be sanctioned, 252, 253, 254. By-laws for creation of, 251, 253. iJividends on, 257-2.59, 431, 432. INDEX. 957 Preference Shares — Continued. Dividends on — Continued. Cumulative. 258, 259. Participating, 25S. Payment out of capital, 257. Exchange of, for shares of a different class, 2C0, 261. Preference and priorities of, 256. 257. Preference as to return of capital or distribution of surplus in winding-up, 257, 258. Procedure for creating — By by-law, 253. By letters patent, 255. Provisions as to control of affairs, 252. Redemption of, 260, 261. Reserve fund, objection to setting aside of, by preference share- holders, 435. Return of capital in winding-up, 834. Further participation in surplus assets, 835. Rights and liabilities of holders of, 252, 253. Rights as to control or interference in management of company. 259. 260. Share certificates of, 236. Voting rights, 257. Limitation of, 260. Preliminaries, 11. I'ri) visions of Act directory, 11. Preliminary Expenses. 174, 212, 213. Incorporation fees, 63, 213. President Authority of, 144, 145. Remuneration of, 504. Principal Office Sim. Held Ollirr. Private Company, 176. 177. Defined, l&'i. Incorporation of, 184. Increase of members beyond lifty. 1S4. Meaning of term, 176, 177. Prospectus, need not fde, is:?. Tnrnim,' itself into public i\ idiiuls. S'ocrot. Se«? Diroi'tors, rrninnicrs. Promissory Note I'ayiui'iit fur sluircs l).\'. l'"")(». Si'o also, Bills, Notes. Promoters Af(iiiirin;r piMpiTtN ;is uiiciits di- triislccs for coiniiiniy, 210. Api'liciition of the Act, 20ii. Collateral ai;reeiiieiit. eiirnrceiiieiit nl' liy comiiany. L'lT. Co-proinoter, pronmler cannot sne, IDr preliminary services, 213. Definition of, 170. Directors acc^ptins gifts, 2112. Disclosure by, to company, 207, 208, 211. Duties of, to company, 207, 208. Fiduciary relationsbii>, 20(;, 207. Commencement of, 207. liiilrprndeut board, duty to provide, 208.. 211. Liability — Incorporation, before. 786. Misfeasance summons, on, 868, 869. Meaninfi of the term promoter, 170, 204, 205, 206. Not partners or agents for one another, 216, 217. Personal liability, where contracting on behalf of proposed com- pany, 214. Preliminary expenses, reimbursement for. 212, 213. Profit, duties in ivgard to making, 207, 208. Profit, secret, 209. Relation of to company, 206ff. Res'ale of property to company, 210. Rescis.sion of contract by company for nun-disclosure, 211. Secret profit, 209. Measure of damages. 211. Selling property acquired while a promoter, 209. 210. Solicitor, whether deemed to be a promoter, 205. Trustee, promoter ac(iuirin'r property as trustee for company, 210. When liable for acts of co-promoters, 216, 217. Property, 9. Purchase of. Iiy cumpany. 44. See also Powers'. Prospectus, 173ff. Agent, misrepres'entalion by. 202. Bonds, issue of, sub-section (d) of section 13 B (1). not applicable to. 18(5. Bonds, on issue of, 481. Caution in drawing, 188, 189. Circular, not making an offer to public, 186. Contribution between directors, 190. Recovery of, by director, 178. Criminal liability of directors for false statements, 203. Damages, measure of, under Act, 189. Deceit, action for — Belief in statements a defence, 195. Delay, effect of, 194. Fraud essential element, 195. INDEX. 959 Prospectus — Continued. Deceit, action for — Continued. Joiuder of other claims, 194. lUo. Liability of company for fraud, 194. Measure of damages for untrue statements, 180. 194. Transferee maintaining action, 203. Transferees:, responsibility to, 194. What is required to support action for, 194. Death of director, effect on liability, 190. Defined, 173, lS.->. Delay in repudiation by subscriber. 200. Director named in. restrictions on aiipointment of, 444. 147. Duties of persons responsible for prospectus. 191. 192. Expert, defined, 179. Expression of opinion, 199. Filing of, 173. Former section. 180. \Yhat contracts to be specified. 181. ileasnirc of damages, 181. Liability under. 182. Waiver of section, 182. Repeal, effect of. 183. . Inaccuracies, effect of, 183. Invitation to existing members, 18o. Invitation to the i)ublic, 18."^. Joinder of claim under Act with clMiin for deceit, etc., 194. 195. Liability — Of ciimpany. for misrepresentations'. 197. 198. Of directors, for untrue statement. 177. ISS. 189. Limitation, jieriod of. 190. For \vron'.,'fully inserting nann; of director. 1(7. JIarked ' private.' 190. Material contracts, 174. 17.".. ISfJ. 187. What are. 18r.. 187. Measure of damages for untnn- statements. 189, 191. .Minimum subscriplioii. i:*.. 171. 1>«>. Misiep.eseutation — Af;ent, by, 198. 199. 201'. Defence to action for ciils. 202. Expert, by. 19S. (Jrounds of liability of comi'any. 197. I'.is. Wlo is entitl.d to relief. 20.3, 204. I'etltions for incor)ioratioii. 20L Transferee. 203. Mi-^-stateinents— Of fact. 19_'. .Mnt.rial. 192. Non-di.sclosure. \'.rj. 19.3. RemedieH a|)art from .statute, 190fr. Non-complian«'e with ntatutory re(|uiremeiit.'«. effect of. 1>>7. Off.T to th«' i»ublie. ^H^,. I'iirtwuiars to he statcil. 173-17n. Present section, isilfl'. i)(.)0 INDEX. Prospectus— Cc) / in iicd. Private compaivj- neeil not file, 183. Private sale aud re-salo of shares, aiiiiliratinii of section, ISO. Promoter, defined, 170. liemedies of f.'ubsc'riber apart from statute — What misstatements will entitle a sharrholdir to relief, 192. 193. Nature of relief, 193. Action for deceit. 193. 191. 19.'). Criminal liability of directors, 203. Defence to action for calls. 202, 203. Kescission, 195-202. Who is entitled to relief, 203-204. Ki'ipudiation. delay by subscriber in. 200 Rescission, 195ff. Action must be against company, 196. Adoption of prospectus by company, 196. Expert, misrepresentation by, 198. Liability of company, grounds of, 197, 198. Misrepresentation by agent, 198, 199 Misrepresentation by expert, 198. Loss of right to rescind, 199. Affirmance, 199. Delay, 200. Giving promissory note, 201. Winding-up, 200, 201. Repudiation of shares necessary, 198. What must be proved to support action for rescission, 195. Statement in lieu of prospectus — Form, 571. Inaccuracies in, 183. What companies must file, 176, 183. Statement of illegal intention, 202. Suggestions for preparation, 187. Uncorroborated statements of vendor-promoter not reasonable ground for belief in their truth, 189. Vendors, consideration payable to, to be disclosed, "174, 186. Names of, to be disclosed, 174. Provincial Comiiaiiies, winding-up of. G94, 695. Provincial Company Re-incorporation of, 56. Status and corporate capacity, 27. Turning into Dominion company, 56. Provincial Legislation Affecting contracts of Dominion companies, 19, 20, 21, 22. Affecting Dominion companies, 96. May not repeal Dominion legislation, 21, 22, 23. Provisional Directors Liability for solicitor's fees, 216. See also Directors. Provisional Liquidator Appointment, 750. Proxy, 528-5.%. Blank, 527. INDEX. 961 Proxy — Continued. Chairman's decision as to, 529. s Corporation voting by, 529. Defined, 9. Lodging before meeting, 529. Regulation of requirements as to, 529. Votes may be given by, 513. Public Company Turning itself into private company, 184. Purchase of Property by Company Procedure for, 44. Quoriim At meetings, 531. When director disqualified from voting, 478. See also Meetings — Directors. Quo Warranto. 74. When proceeding by way of, permissible, 457, 458. When company disregards provisions of charter, 454. Railways Legislation respecting, 1. Ratification Of acts of agents, 148, 149. Of acts of directors, 484. See also Directors. Real Estate Defined, 3. Receiver Appointment of — V,y bondholders or trustee, 409, 411, 412, 413, 414. By Court, 414. Effect of, on the company, 415. Bondholders, appointment by, 409, 411, 412, 413, 414. Borrowing by, 415. Duties of, 415, 416. Kxpenditures by, 415. Filing accounts of, 354. I'onalty for default, 3.')4. Liability of bondliolders for acts of, 414. Liquidator, displacing receiver, 761. Manager, receiver and. -lUi, 117. Personal liability of, 414. Possession of, 410. Proceedings against, 416. Registration of order appointing, .354. Wlietlier .igent for comiiany or bondholders, 414 Reconstruction, 7tU'\, ."94. Rednction of Capital Addition to name of company ol " aiHl reduced," 20.'). By-law for. 20.".. To be confirmed by shnrcholders. 20."). Concealing name of creditor, penalty for, 207- D.P.A. — 01 9&1 INDEX. Reduction of CtivHal ^('oiit in iird. Coiitirmiug retluction, 266. Consent of creiiitors, dispensing with, 266. Creditors, objections by. 265. Evidence witb jippHcntion, 207, 208. llb'gal reduction, 272. Liability of members in respect of i educed shares, 266, 267. Modes of reduction, 270, 271. New stock, provisions of Part apply to, 268. Notice of granting supplemental y letters patent, 208. Objections by creditors, 265. Pari passu, 271. Power to reduce capital. 111, 265. Procedure for, 272, 273. Publication of reasons for, 267. Supplementary letters patent confirming, 266- Transfer of shares, having effect of reducing capital, ,330 Register Of debenture holders — Copies of, may be required, 356. Inspection, 356. Of shares — Defective, 559. Rectification of, 795. Of mortgages and charges, 351ff. Entry of satisfaction on, 354, 355. Index to, 355. Inspection of, .356. I'rovisious as to, construction of, 357. Rectification of, 354. To be kept by company, .355. Of transfers to be kept, 532. Entries in prima facie evidence, 319, 557. Regulation of Trade and Commerce Scope of the phrase, 20. Remuneration Of directors, see Directors. Of officers, see President. Rent. See Windiim-up. Requisition .Meeting called by sharclioblers by, 513, 514. Reserve Fund, 4.34-4.36. Residence Of corporation. 114. 115, .548. Resolutions Directors, of, 491. Distinguished from by-laws, 491. Individual consents distingui-shod from, 515. Shareholders, see Meetings. Restrictions Imposed by Act, 88, 95. Statutory, 92. INDEX. 963 Returns by Company, o.j.llT. Fees for, 63. Salary and W^ages Claims for, priority in winding up, 813-816. Sale Business and uiidertakin.u'. of, J)26. Power of sale, exercise of, by mortgagee of shares. 342, 343. Shares, of— Buyer, implied contract of, to indemnify vendor anainst calls, 339. Controlling interes't in company, sale of, 339. Damages for breach of agreement to sell or buy, 337. 339. Purchaser refusing to accept, remedies of vendor, 337. Specific performance of agreement for, 337, 338. Transfer tax. payment of. 336. Vendor, duties of, 336. Duty of, not tu delay or prevent registration of transferee, 338. Sales By directors to the company. 479, 480. And see Directors. By promoters, see Promoters. Seheduls Forms, 565-570. Scire Facias Against a shareholder, 547. Discretion to grant fiat, 75ff. Letters patent, evidence in proceedings, 560. Nature of, 74, 75. Revoking fiat, 84, 85, 86. To annul letters patent, 68, 74, 545, 546. Where charter fraudulently obtained, 546, 547. Scrip, 10. Scrutineers I )uties of, at meetings, 530. Seal Affixing of, without signature of officers, 131. Contrncts. absence of seal mn.^t be siiecially pleaded, 124. See also Contracts. I>eli\(M-.\ rofpiisite, 131. Failure to have word 'limited' on. penally, ."idl. Fraudulently allixe.'i)('ctns to be filed before. 170, 183. 2.3.5. Transfer of issued shares in lieu of, 235. mtra vires, 233, 234 See also ' Allotment' Application — By agent, 226, 227. Conditional. 24,")-24n. Evidence of condition, 248. Waiver of condition, 249. Conduct taking place of, 230, 232, 241. Delay in accepting, 239. How made, 226, 227. 228, 229. In writing, 228. Non-compliance with condition in, 247. Rei)U(liation of subscription after allotment, 244. Subject to condition precedent, 245, 246. Subject to condition suhsequent, 246, 247. Subject to collateral agreement, 24G, 247, 248, 249. Unaccepted application, 229. Under .seal. 228, 229. Verbal, 227. Withdrawal, 241, 242. Withdrawal after allotment, 244. Withdrawal of application under seal, 242, 243, 244. Bank, of a, double liability on, 799, 800. Bonus of common, given to subscribers for bonds, 379, 380, 386. Bonus shares, transfer of. 329, 683. Calls on, see Calls. Cancellation, 109, .303. See also Cancellation. Consolidation, see Consolidation of Shares. Contract to take, 225, 226. Definition of, 9, 10, 221, .311. Denoting numbers of, 233. INDEX. 967 Shares — Con tin ucd. Discount — Issued at — Innocent purchaser, position of, 797, 798. Issuing at. 41. 109, 292, 793. Power to issue at a, 109. Execution against, 222. Forfeiture — By-laws not prescribing quorum of directors, forfeiture by less than majority, 490. See also Forfeiture of Shares. Foundrrs' shares, 8, 173. Fractions of, purchase of on consolidation, 264. Fully paid and non-assessable, 8. Holding shares in other companies, 217. By-law, necessity for, 217. Common law rule, 218. Effect of sec. 44, 218, 219, 220. Letters patent authorizing, 217. Issue — Meaning of term, 796. Of, at a discount. 41, 109, 292. 793. Of, at par where at a premium on market. 109. Of, in consideration of future services, 109. Legal owner and cestui que trust, 171. Mortgagees, 170. Pledgee, 169, 170. Pledgor, 171. Trustees. 166-169. Liability on, 41- Administrators, 166, 169. Beneficiaries of deceased shareholder, 168. Cestui que trust, liability to trustee, 167. Collateral security, on shares held as, 166, 167, 169. Commencement of, 279. Company giving security on its own shares, 171. Effect of tran.sfer, 159. Executors, 106-109. In case of illegal transfer, 330. ^co also Sharclioldcrs, Contributories. Lien on, shareholder indebted to company, 324, 32r). Loan of. .313. .".44. Loans on security of, 3-11-343. Mortgage of. 341-.343. Foreflosure l»y lendei'. .341. I.render's power of sale, 342, 343. Mortgagee of, agreement to vote on, enforcement of, 342. Nature r.f shares. 221. 222. No nominal or par value. HJiares of, 7. .".<>. 31. 47, 48. Notice of allf)fmi;nf. Ser- ' Allotment." Number of. held by each shareholder to be recorded in books, .531. Option to accej(t share.'? or cash in payment. 132. Par value to be fixed. .37. 3S. Particulars in apiilieafion for incorporation. 28. 38. 9GS INDEX. Shares — Coiitiinud. I'aymeut, ir^^-inS, 101. 102, 1(«, 1(54. 7!>'_>. I'.oliof thiit no liability existe. IHS. Hy diviiieiiii, wIutc cdinpauy insoJviMit. 1.">1. Cash in. what is. 7!lo, TUG. Cunniienci'niont of business, before, (>">, (U!. (iT. Consideration other than eash, adequacy of. Court will not euquii'i' into. 7S'_'. 7!).'!. Contract, written, where payment otherwise than in cash, 702 ff. Consideration, adequacy, 7J)8. Filins of. 7n:?. 794. Parties to. 704. Estoppel of company, IHS. Mode of, 155, 156. rromissory note, payment by, 156, 236, 292. Property, payment by, 15(>. Services, payment by. 156. Personal estate, shares are, 220. Preference. See I'refereuce Shares. Property, issued for, 41, 42. And see I'ayment, supra. Purchase of by company, on consolidation, 264. Qualification, transfer of. by director, 471, 472. Uepurchase of, by company. Ill, 112, 307, 30S, 709. Sale of. See Sale of Shares. Share warrants. See Share Warrants. ■Situs of, 347. Subdivision. See Subdivis'ion of Shares. Subscription — • After incorporation of comruiuy. See Application. Before incorporation. 120, 224. Of definite amount as condition precedent to commencing busi- ness, ()5, 546. Repudiation of — Conditional subscription. 245-249. Fraud. 244. 245. See also Prospectus. Infancy, 251. Misrepresentation, 244, 245. See also Prospectus:. No shares created which can properly be allotted. 2.50. Signatory of memorandum, by. 224, 225. Total failure of consideration, 2.51. Where company other than one in which shares were applied for, 2.50. Surrender, agreement to, 248. Surrender to company, HI. Surrender, option of holder of, illegal. 257. See also Surrender of Shares. Trafficking in its own, by company, 111. 112. .107, 308, .311. 799. Transfer — After call made, 293. Before call made, 293. Competing claims, interpleader by company, 552. Directors consenting to transfer of tln'ir own shares. 471. 472. INDEX. 969 Shares — Continued. Transfer — Continued. Power to restrict, 113, 321ff. Provisional directors, powers of as regards, 442. To increase voting power, 528. To insolvent, liability of directors for allowing, 506. Winding-up, transfer of shares void after. ol2. 735. See also Transfer of Shares. Transmissibility of, 53. Transmission, procedure to settle ownership, 551, 552. Trust, notice of, when transferee affected with, 340. Voting on. See ' Voting,' ' Meetings ' and ' Shareholders.' Without nominal or i)ar value. 7, 30, 31. 47, 4S. Provisions of Act regarding, 30. Share AVarrants Bearer, rights of, 309. To be shareholder on surrender of warrant. 309. To sign requisition for meeting, 514. Under regulations, 310. Coupons, providing for payment of dividends by, 309. Delivery of, transfer of shares? by, 309. Director, not a qualification for, 319. Entries on issue of, 310. Issue and effect of, 309. Meeting, warrant holders not considered where vote of definite part of stock required. 310. Notice of meeting, whether bearer entitled to, 516. • Power to issue, must be taken in letters patent. 319. Regulations to be set out in application for incorporation. 38, 319. Surrender of warrant, 310. Theft of warrant. 318. Simplex Commendatio, not ground for rescission of subscription, 199. Situs of Shares, 347. Solicitor Apiiointment by liquidator, 770. I'romoter, whether deemed to be, 205. Solicitors Fees, liability of provi-srional directors for, 216. Pre-incorporation costs, 213. Special Act Incorporation by, 49, 50, 563. Special Meeting, ~A'.'>, 51 I. 515. Specific CharRe, Sec ' I'.onds.' Statement in Lieu of Prospectus Allotment, must be filed bcfi.rc, 2.'',5. Filing of, 176, 183. Form of. 57 1 . Statrments and Returns, 551 fT. Status Inierferencc with, of Dominion rompiinies, 20, 21, 22. Not nfferted by non-exercise of powers, 24. 5)70 INDEX. Status — Con tilt iird. Of 1 >iii nf. w iiKliim-iip. 7."'.">. Status and Corporate Capacity I'ruN iiicinl coiiiitnnu's. 27. Statutes. 1 'iiiiiiiiidii. rchitiuji' to ('oiiipMiiy l;i\v, 1. Statiitory Corporations. 10t!7. Stock Certificate, ."». See Sliare Certificate. Stock Ledger, 10. 45. Subdivision of Shares ISy-law for. '2M. Procedure for. 272, 273. Subscription for Shares Auent, made by luiautLiorized, 790. Before incorporation, 784, 785. Repudiation of subscription by subscril)er to mcuiorandum, 224, 225. Conditional, conditions not complied with, 789. Fraud or misrepresentation, induced by, 71)0. Instalments, calls, anticipating', 277. Instalments on, distiusuisheil from calLs', 27S, 279. Withdrawal of application,, 786. See .' Shares,' ' Subscription ' and ' Apijlication.' Siibsisting Corporation Wlicn (.•omjiany deemed not to be, by reason of default in filing Summary, 555-. Sub-stratum Gone, ground for winding-up order, 700, 701. Succession Duty Acts Compliance with jirovisions of, on transfer of shares, 346. Suits liy shareholders', 520-522, 524. Summary Annual, filing of, 554. Companies exemi)t from filing. 555. Effect of failure to file for three years, 555. Endorsement by oflicial of Department, 555. Penalty for default in filing, 554. For non-compliance, no right to sue for, 557. Proof of failure to file, 5.55. Summons, service of, on company, 543. Supplementary Letters Patent Extending, varying or reducing powers, 152, 153, 154. ■Fees for, 64. Irregularity. Attorney-General may take objection, 269. On alteration of capital stock, 264, 266, 267. IXDEX. 971 Supplementary Letters Patent — Continued. Reduction of capital, confirming, 266. To be recorded in books, 531. Surrender of Charter Majority, right to determine on, 524. See Ontario Act. Surrender of SLares Collateral agreement for, .307. Forfeiture, as a short cut to, 306. Objection to. 305. 307. Statutory power. 306. When permissible, 306, 307. Winding-up, when a good defence in. 791. See Shares. Taxation Provincial legislation for taxing Dominion companies, 97. Torts Liability of company for, 149, 150. Trading Company Defined. 309. Powers of, to borrow, 359, 360. Under Winding-up Act, 680, 682. What is a. 129. Trafficking By company in its own shares, 111-2, 307, 308, 311, 799. Transfer Agent and Register KfquirL'nii'nts of trust comijany before acting as such, .349. Transfer Book, 10. Transfer of Shares Administrators, transfers by. 345, 346. Blank endorsement. .313. 316, 341. Bonus shares, transfer of, 329, 683. By executors. 262, 263, 312, 319, .345. By personal representatives. .3<)9. Calls unj.aid. shares with. .30f), ;{23, .324. Change of name of shareholder, 34{>. Company purchasing its own shares, 111-2, 307-8, 311, 79!). Company transferee, 311. Conflicting claims to shares* before i-eL'istralioii. .".;'.i(, .';i{, alTefting transferors and transferees', .331. Execution creditor, rights of against unregistered trnnsferee, 320. I'lace whi're seizure should be made. .321. lUgbts of, where transferS, l,"(i)_ Transfers Register of. to be kejit. 532. Transmission of Shares I'ruciMlnrc Iri settle u\\ n<'i-siii|i. .551, 5.52. Trust Companies, 1. 2, 5(;4. Trust Deed to Secure Bonds Acc..j.-ratioii clans... in. '.'.UU. KC. fOS. Advantages of. 395. Book doJ)ts, non-registratifin of mortgnge of, 396, 397. Chattel mortgage, practice where not reglHtored ns, 397. Cojiy of, bondholder entitled to, .''5»5. Coupon.s, 403. i>/4 INDEX. Tnist Deed to Secure Bonds ('niiliiiiicd. I'ioalini; i-h:irsi'. iinii-ri'uistratidii as rt';;ar(ls, 'AWt, ,'597. lutoiest, rate of, 401', J03. Quebec notarial copies to be deemed diifiinal;'. 3.17. Redemption of bonds. 404, 405, 40<). liegistration as land mortfja.ye, iUK"). Registration as (liaticl mortgage, 85)5-397. Registration, nndor l)(Hiiinion Act, .'>9S. Registration, under Ontario Act, .■>97. Sinking fund, purchase of bonds for. 400. Trustee of — Liability of, exclusion of, 400. License, necessity for, when trustee an extra-piovincial cor- poration, 399. Position of, powers and duties. 399-401. Remuneration of, 401, 413. See als'o Borrowing, Bonds, Mortgages and Charges. Trustee Jyiability in respect of shares, 16(5, 1U7, 168, 169. Person contracting as, for company to be incorporated, 21G. Voting rights on shares, 172. Trusts Execution of, 261, 262, 263, 264. 'Receipt of shareholder a discharge, 261. Exemption clause, 263. See also Shares. Underwriting Defined, 11. Unincorporated Company, 58. Ultra Vires Application of doctrine of, 89. See also ' Powers.' Borrowing, 373-376. Relief in case of ultra vires borrowing, 373. Consent judgment, effect of, 550. To enforce ultra vires acts void, 101. Contracts'. See " Contracts — Limitations.' Doctrine of, lOOff. Effect of ultra vires acts, 101. Estoppel, none from showing act ultra vires, 101. Illegal and ultra vires acts distinguished, 101. Notice of ultra vires purpose, 132. Remedy against directors, 102, 105, 496, 497. Siibroiration. right of lender in case of ultra vires loan. 102, 103. Validity of Incorporation Grounds of questioning, 13. Vendor Wlio is. for purpose of prospectus, 175. 186. Vice-president Authority of, 145. Voting Agreement to vote shares, 172. WlXDING-UP.] INDEX 975 Voting — Voiitin ued. Executor, voting rights, 172. Mortgagee, voting rights, 172. Pledgee, voting rights, 172. Pledgor, right of. to vote, 172. Trustee, right of. to vote, 172. Two-thirds iu value, meaning of, 36o. See also ' Meetings,' ' Directors,' ' Shareholders." W^ages Claims for, priority iu winding-up. 813-816. In receivership, 357. Liability of directors for, of certain employees, 507ff. Assignee, right of to sue, 509. Classes of employees covered, 507. Clerk, 508. De facto directors, 512. Enforcement of liability, 510, 511. Execution, reciuirenients as to, 511, 512. Joinder of claims, 511. Joint and several liability. ii07, 51 1 . Labourer, 508. Limitation as to time. 507. Servant, 508. Several plaintiffs, 511. Travelling exiteuses, 509. Wages, what are, 509. Winding-up. effect of. 511, 512. Warehouse Receipts Power to give. 112, 113. WINDING-UP Absconding Contributory or Official, arrest of, 8(51. Actions Against couiiiany, stayed, 73."». liegun without leave, 875. Leave of Court, brought witiiout. 738. Leave of Court necessary. 735, 730, 737. I,ic|uidat(jr. brought by. Tilltl. .Staying, against conipany, 720, 727. Adjournment of Petition, 720. 725. Affidavits, bifiuc whom sworn, KSI . Amendments RiilfH as to. S7.'!, Appeal I''r(ini iirdcr apjinititing piTmiinciit !ii|ui(bit<)r, 752. From order giving leave to bring notion, 741, 712. AppcaLs AnifMint invuiv.'d. H^lit, K.VJ. Cases in wliich no Jippe.al lies. 854. ;)?(> TXDFA- [Winding-up. Appeals — Colli in iicd. Court to which aiiposil lies'. S-49. Future rights, 849. Leave to appeal — .\iuouiit involved. 840. 852. Future ri.uhts, 845). 8r.l, 8.")2. Order refusing to grant, 851. Other instiinces where leave granted, 853. Practice, in obtaining, 854, 855. rrinciple, questions of, 8ol2. Proceeding without, 855. Test cases, 852. Winding-up order, from, 850. Master, from, to single judge, 851. Practice. R49. Princiiile. where other similar cases affected, 849, 852. Procedure, 850, 851. Sui.reme Court of Canada, to, 849. 858. 8.')7. Time for appealing, extension of, 855, 856. Winding-up order, appeal against, 850. Application for 'Winding-up Order See Winding-up Order. Appointment of liquidators See ' Liquidator.' Attaclinient of Debts, 861. Attendance of "Witnesses, how secured, 861. Banks Provisions respecting, 882-884. Bond Liquidator's, on appointment, 753. Cost of, allowance of, 776. Bondholders Action by. when permitted, 875, 877. Effect of winding-up on, remedies of, 409, 410, 411, 412. Enforcing rights under security, 743. See also Bonds. Proving for interest, 403. Books Destruction of or false entries in, penalty, 880. To be prima facie evidence, 881. Claims Compromise of, 771-773. Sanction of Court, 772, 773. Security may be taken, 771. Contestation of, 832, 833. Corroboration of, 821. Disallowance of, 821. Proof of, 821. Taking priority over costs of winding-up, 833. Time for sending in, 820. Commencement of 'Winding-up, 69L WlXDIXG-UP.] INDEX 977 Compromise Meeting to consider proposed, 806. Sanction of, 806, 807. Compromise of Claims, 771-773. Contestation of Claims. S.'^2. 833. Answers and replies, 832. Costs, 832. Default in answer by claimant, 832. Objections to be filed in writing, S32. Security for costs, 832, 833. Contribntory Arrest of absconding. 861. Contributories Meetings of. 805. See also ' Contributories.' Costs Pa^vable out of estate, 833. Priority of liquidator's, 769. Solicitor of liquidator. 770. 771. Taking priority over costs of winding-up, 833, 834. Conrt May refer matters, 859. Powers to be exercised by single judge, 859. Courts Auxiliary to one another, 871-872. Order of one Court may be enforced by another, 872. Proceeding on order of another Court, 872. Creditor Ri^'ht to intervene in action hrought by liquidator, 765. Creditors Classes of, representation by solicitors or counsel. 873. Compromise with, by liquidator, 773. Enforcing claim outside the liquidation, 875. Tlolding security, 823ff. Meeting of, eom[»any calling deemed insolvent. 081, 086. Meetings of, 805- Restrained from proceeding with action, 720. Revaluing security, 824. Secured, obtaining leave to enforce remedies, 738. Valuing security, 824. Wishes of, to be regarded. 873 Creditors' Claims Clerks and employees, 813-816. Contingent claims, SIO, 811. Crown, priority of. 809. 810- Depoaitor.% 809. Cnarnntors, 810, 811. Interest on. 808. Proof of. SaS. Rent, claim for, 811, 812. Taxes, 812, 813. n.c.A.— 02 ^78 INDEX [WlNDINQ-Ul>. Defaults, ;innMi(liii(>iit of, ST."?. Delegation Order of. 859. Demand, under sec. 4, (tSO-OOl. Wliat constitutes, 685. Deposits, iMiclniiiicii. disposition of. 870. Destruction of books, penalty for. 880. Directors Termination of fiduciary relation.ship, 47f?. Discharge of Liquidator, 77S. 77!). Discovery Of assets, ordinary practice as to available, 860. Petitioners not entitled to, 706. Distress Before winding-up order, 749, 830. Landlord's rights as to, 748, 749, 750. Leave necessary to enforce, 738. Leave to levy, 745. Rent accruing after winding-up, 749. Before winding-up, 748. r;irtly Ix'foi'c ami partly after winding-up order. 74!t. 7.")0. Distribution of Assets, 821, 833. Claims not sent in, liquidator not liable to holders of, 822. Preference shareholders, priority as to return of capital, 8.35. Rank of claims sent in after distribution has commenced, 822. Shareholders who have paid in advance of calls, priority of, 835. Dividends, uiK/lainicd. disjiosition of. 87!). Dividend Sheet, preparation of, 826. 827. Double Liability, on bank shares, 799, 800. Evidence Books to be prima facie evidence, 881. Examination of persons havinir effects of company or information, 862. On oath, Court may require, 863. Execution, none after r-ommeuccmcnt of windiim-up, 827, 8.'!(), 831. i>ii>! also ' executions.' Expenses, jiayable out of estate, 8^i3. Failure to comiily with ordf-r of Court. .S80. Foreign Company, (>82, 694. t;!).".. cnti, 711. Forms, S78. Frar.dnlent Payments, S 14 SIM. Fraud-nlent Preferences Contracts injuring or obstructing creditors, 836. Contracts with considor.-ition, voidable, whon, .888. Contracts made with intent to defraud or delay creditors, 838, 839. Gratuitous contracts, 8-36, S37. Presumption of intent to defraud, 837. Rebuttable on proof of pre.ssure, 837. Sale or tran.sfer in contemplation of insolvency, 8.39. Presumption if within thirty days after winding-up, 840. Contemplation of insolvency, 842, 843. Winding-up.] index 979 Garnishment of Debts, 8G1. Insolvency Assignment, if company makes general, 684, 688, 689. Assigns, removes, etc., property, if company 684, 688." Defined, 687. Execution, if company permits to remain unsatisfied, 684, 689. Neglects to pay sum demanded, if company, 689-691. Otherwise acknowledging, 684, 687, 688. Proof of, 685. Insolvent, when company deemed. 684if. Inspection of books' and papers, 864. Shari'holders' right of. terminates on winding-up, 534. Inspectors Appointment of, 774. Purchase of assets by, 774. Remuneration of, 775fif. Insurance Companies, other than life, 889. Irregularities Amendment of, ^"3. Judicial Notice of Seals, etc., 882. Landlord I'referential claim of, in winding-up, 745, 746, 811, 812, 829. See also ' Distress.' Leave To appeal. See Appeals. To issue execution, etc., 745. To take proceedings, 735, 736, 737. Application for, 739, 740. Discretion to grant, 740, 741, 742. Lien None after commencement of winding up, 827. Lien for costs excepted, 827, 831, 832. On documents, 73^^, 829, 863. Life Insurance Companies Provisions respecting, 885-888. Liquidator Conflict as to appointment of, 807. Failure t<> deposit in bank money of estate, penalty, 880- Removal from olHce, 880. Subject to summary jurisdiction of Court, 874. See also ' Liquidator.' Maritime Liens Priority of, 829. Master .Turisdiction. limitations of, 876. Jurisdiction of, in questions of misfeaHimcc, 8C»5. Not a Court of competeiit jurisdiction to try question of propriety or vjiliif <>f 11 transfer of property. KJ3, 844, 850, 800. Sfciirity. [lowfT to fix, of liquidator, 754. Mechanics' Liens Priority of. 828. i)80 INDEX [Winding-up. MeetiiiRs Chairman of, 806. Creditors, resolutions of at, 807. Votes according to amount of claim, 80G. Pass book, production of at, 808. Voting at. 806. Meeting of Creditors Company calling, deemed insolvent, 684, 686. Provincial company calling, whether winding-up order will be made, 693. Meetings of Creditors, 805. Minister of Finance Unclaimed moneys deposited by liquidator, to be paid out to, after three years, 879. Misfeasance. See Misfeasance. Moneys Deposit of by liquidator, in bank, 777. Balance remaining after final winding-up, 778. Penalty for neglect, 778. Mortgagees Enforcing rights against mortgaged property, 743. Summary procedure, whether bound by section as to, 875, 876. Notice Court may dispense with, 871. Offences and Penalties, 879. Officers of Company Refusal to give information, penalty, 880. Order . Office copy of, to be evidence, 882. Winding-up, 699. And see Winding-up Order. Pass Book Failure to produce, how proved, 882. ■ Production of, 808. Petition To enforce claims against company, 736. For winding-up order, 703. Adjourned, 712, 713, 720, 725. Amendment, 685, 720. Bondholders, by, 408, 409. Debt disputed, 713. Dismissed, 711, 712. Granted, 710, 711. Notice of presentation, winding-up commences on service of, 691. 692. Oppo-sed by majority of creditors, 711, 713. Service of, 692. Shareholder appearing on, 720. Who may appear on hearing of, 720. Who may petition, 713-716. Without reasonable cause, 715. Winding-up.] index 981 Powers Conferred by Act are supplementary, 873. Powers of Court To be exercised by single Judge, 857. Privileged Claims for Wages, 813-816. Procedure, 8o7fl'. Proceedings Staying, against company, 726, 727, 728. Stay of winding-up, 728-730- Process, service of, out of jurisdiction, 860. Production of Papers, Court may require, 863. Production, order f(jr in winding-up, 8o8. Reference Order for under s. 110, 859, 860. Regulations, 878. Rules, S78. Until made ordinary rules apply, 878. Sale of Property Liquidator, by, 768, 769. Secured Claims xVpplication of proceeds of security by creditor, 825, 826. Bondholders, right to bring action to enforce security, 825. Compromise of, 826. Crown, may not displace creditors holding security on specific as- sets, 826. Delivery up of security to creditor, 823. When subsequent incumhrancers, 823. Judgment or execution, security by, 823. •Leave to bring action to enforce security, 825. Mortgage, security by, 823. Mortgagee, right of, to bring action to realize security, 825. Negotiable instrument, when security is a, 822. Ranking of secured creditor, 822. Itetention of security, 822. Authority of Court necessary, 823. Revaluation of .security, 822. Valuing security, 822. Security Fixing of, may be delegated, S59. Liquidator, of, 753. Masti'r. jiowcr to (ix, <>f liiiiiirlator, 751. Trust (■i)rii|iaiiy iiiifxiintcd lii|iii(latnr, iicfd mil i:i\'i'. 751. Sequestration Void if without leave, 745. Service of Process out of Jurisdiction, S<><». Set-off J >i'hts of <'i)miian.N transferred to contributory, 848. Law of to apply, H1<",(T. Refpiiremfnts an to, 816(T. SharfliDJdcrs'. l>v. SIS. 1)82 INDEX [Winding-up. Slinreholdri's KiTii't (if wiiHliiiii-iip on liability oi", 1S{\, TNS. Mt'otiuRs of, SO'i. Sixty-day Demand, (ksjld!)!. Statement, exhibitintr, sliowing inability to nioct liabilities, 084, ()8(i, CkST Stay Not to bi- orderod pending disposition of selected claims, "821. Stay of Actions Application for, 742. Staying Proceedings, 726, 727, 728. Staying Winding-up Proceedings, 728-7^0 Suits None against liquidator without leave, 875. Summary Order KcuKxlies to be obtained by, 874-878. Summary Procedure ^^'hetl>er remedy by way of, exclusive, 876, 877 Summons for Refusing to Attend, 80.'?. Surplus Assets, distribution of, 834. Time for sending in Claims, 820. Unclaimed deposits, 879. Unable to Pay its debts Company insolvent if, 684. Meaning of phrase, 685, 686, 689, 690, 691 Wages, priority of in, 813-816. Assignee of privileged claim, priority of, 815. Witness, refusal of to answer, penalty, 881. Witnesses, attendance of, how secured, 861. Woodmen's Liens Priority of, 828. WINDING-UP ACT Apidicatiou of Act. Bankruptcy Act, how affected by, 679, 680. Banks — Application of Part I., subject to provisions of Part II., 698. Certain corporations excepted, 698. Clubs, 082, 697. Company already dissolved, 697. Company whifh lias not commenced business, 697 Companies ordered to be wound up, 696. Foreign companies?. 682, 694, 095, f;90, 711 Illegal companies, 697. Insurance companies, application of Part I. to, 698, 699. Provincial companies, 094, 098, 700. Bankruptcy Act. 679, C^). Contributory, defined, fi81, 083. Court, defined, 681, 682. WlXDIXG-UP.] IXDEX 983 Winding-up Act — Continued. Definitions. 680-G&2. Dominion bankruptcy legislation, 679. I>ominion Parliament, jurisdiction of, G93. Foreign companies, how affected, 682, 694, 695, 696, 711. Interpretation, 680. 682. Intra vires of Dominion Parliament, 679. Jurisdiction of Dominion Parliament, 693. Provincial companies, act valid as regards insolvent, 682. Trading company, defined, 680, 682. "WINDING-UP ORDER Appeal against, 850. Application for order, 702£f. Affidavit in support, 707, 708, 709. Service of, 707. Assets, where no, order refused, 716, 717. Assignment, exercise of discretion, if company being wound up under. 718. Assignment for benefit of creditors, made after. 712. Company, by, 702. Costs, 720ff. Security folr, 725. Creditor, by, 702. Contests between creditors, 718-720. Discontinuing proceedings, 703. Discretion, exercise of, 718. Evideiife in support. 707, 708. 709. How and where made, 702. Liquidator's costs, 724. Notice of. 702. 703, 70.". 706. Waiver, 705. Dispensing with. 705. Service of, 70.">, 70C,. Petition adjourned, 712, 713. Dismissed, 711. 712. (Jrjint.d, 710. 711. F'elilioiier's costs, 721, 724. Power of Court on, 716. Practice on, 702, 703. Practire as to costs. 722, 72.''., 724. Proceedings unni'ce.ss;iry, will not be granted if. 717. Province of head oflicc, must be made in, 702. Res judicata, 71 S. Hub's MS to costs, 722, 72.'!. Sccurit.v for costs. 725. Sharehf>lder, by. 7011. Vobinl.'iry wifHlinu-iip proceedings when inti-rfered with. 719. Wiio may jietition. 71.'{-7H!. Carriiige of order. 720, 721. Disputin-z validity of order. S.50. 984 INDEX [Winding-up. Wiudiug;-up Order — Coniiininl. FylVei't of w imiiiig-up order, T.'iOfl". Actions nRniust company stayed, 73Ji. Articles, effect on, 7n4. Bondholders, remetlies of, 409, 410, 411, 412. Contingent liabilities, effect on. 734. Contracts, effect on. 782, 733. Liens, effect on, 733, 827. Servants, operates as discharge of, 733. Shareholders, effect on right of. to sik; for niisreprcsenUition. etc., 733. Transfer of s'hares, prohibited, 735. Voluntary winding-up, effect on, 733. Ex debito justitia^. when granted, 709. 710, 716. Grounds for — Capital impaired, 700. Deadlock, 701. Insolvency, 700. Just and equitable, 700. Resolution of shareholders to wind uy. 699. Sub-stratum of comp.any gone. KM). 701. How got rid of, 728. In what cases will be made,, 699. Petition for. 703. Amendment of, 704. Evidence in support of, 706. 1 UC SOUTHERN REGIONAL LIBRARY F ACIL TY AA 000 729 725 2