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Henry Westmacott had deposited the deeds granting in order that certain questions, arising upon the disthe annuities with the executors of the late Lord charge brought in by the inspectors, whereby they Beauchamp by way of equitable mortgage. Henry accounted for the application of the moneys receivel Westmacott was dead, and his executors, who were by them, might be argued in Court upon an agreed the defendants in the suit together with Lord Beau- statement of facts. champ's executors, submitted to a decree of redemp- One of these questions related to certain payments

made to Messrs. Pewtress, Low & Pewtress, paper The minutes had been drawn in accordance with the manufacturers, for paper supplied by thein for the form of decree in “Seton on Decrees," p. 473 (3rd ed.). “Sun” newspaper, while Low, one of the inspectors, Baggallay, Q.C., and C. Barber, for the plaintiff,

a partner in that firm, i.e. until December,

1851. Messrs. Pewtress & Co. had received the objected to this form.

regular trade price for the paper so supplied, but the Cole, Q.C., and Jacnoghten, for Westmacott's exe- plaintiff and the creditors contended that they ought

only to have received the cost price. Selwyn, Q.C., and Lea, for Lord Beauchamp's Apparently, Messrs. Pewtress & Co. had supplied the executors, supported the minutes as proposed.

paper for the “Sun” newspaper previously to October,

1848. At any rate, they were creditors of Young for The Master Of The Rolls said that the plaintiff a large amount. could not be compelled to be kept out of his estate

It was alleged in evidence, on behalf of the inspectuntil the equities and accounts between the origi. tors, that shortly after October, 1848, the question who nal mortgagee and the sub-mortgagee were settled ; should supply the paper for the newspaper was disand ordered that, on the plaintiff paying into Court cussed between the inspectors, the plaintiff's testator, what should be found due to the defendants, the Harmer, and several of the other creditors; that original mortgagees, for principal, interest, and costs, Clayton, the other inspector, and several other crethe estate should be conveyed, and the title-deeds ditors, claimed the right of supplying part of the delivered up to him by all the defendants.

paper; that Low threatened to retire from the inspec.

torship if his firm were not allowed to continue to Master of the Rolls. }

supply the paper ; and that Harmer, who under the CHAPLIN v. Young, 19 FEB. 1864.

inspectorship deed could resume the management Creditor's Deed-Profit by Inspector.

whenever he thought fit, decided that Low's fru

should continue to supply the paper. But all the Under the provisions of a creditor's deed, a neuspaper

creditors were not parties to this discussion. belonging to the debtor was managed by him under the

It appeared that all the paper supplied by Peru control of two inspectors. A firm in which one of the tress & Co. to the “Sun” newspaper had been manuinspectors vas a partner, supplied paper manufactured factured by that firm, and that no part of it had been by themselves, and were paid at the regular trade

bought from any other manufacturer. price :

Scluyn, Q.C., and G. L. Russell, for the plaintiff, Held, that in the absence of any clause authorising contended that the payments made by the inspectors the employment of the inspector's firm, these payments to Messrs. Pewtress & Co. while Low was a partner

, could not be allowed to the inspectors, except to the could only be allowed to the extent of the cost price extent of the cost price of the paper.

of the paper supplied. A trustee could not be allowed The hearing of an adjourned summons in this case is to make a profit, reported ante, p. 449, and the facts are there fully stated.

Bentley v. Craven, 18 Beav. 75. Murdo Young had carried on the “Sun” newspaper

It had been suggested on behalf of the inspectors, from October, 1848, till March, 1862, under the pro- that at any rate only Low's share of the difference visions of an inspectorship deed. In July, 1862, the between the trade price and the cost price should be Lord Chancellor made a decree, directing an account disallowed, but this was clearly untenable. of all moneys received by the inspectors, Low and

Cecil Russell, for fifteen other creditors, supported Clayton, &c., in respect of the newspaper, and of the the same contention. application of such moneys under the provisions of the inspectorship deed. The result of the decision Baggallay, Q.C., and W. Morris, for Clayton and upon the adjourned summons was, that the inspectors the executors of Low, contendedwere liable to account for the application of a sum of 1st. That the general rule did not apply to inspectors 158,2061. 113. 11d., paid to their account with certain of a creditor's deed. Inspectors were in a different bankers ; but not for a further sum of 65401. 58. 2d. position from trustees, particularly where they were which had been received by Young, but which he had only to see how the business was carried on, and 13 not paid to their account.

themselves to carry it on, The case was now again adjourned from Chambers, Chaplin v. Young, ante, 449, 451.

The persons appointed trustees or inspectors of ereditor deeds were now usually some of the larger

LOWXDES v. Tue GARNETT AND creditors, but these would be virtually excluded from Wood, V.-C. MOSELEY GOLD MINING COMsuch offices if this rule were held applicable ; the 17, 19 Feb. 1864. PANY OF AMERICA (Limited), prospect of profits to be derived from subsequent

and Others. dealings with the debtor being always a principal inducement to creditors to allow a business to be company Advance by Directors for Necessaries carried on under inspection. It was generally sup

-Statute of LimitationsAcknowledgment. posed that the rule did not apply to inspectors, and

If a company has incurred a debt for necessaries this accounted for there being no special clause supplied to it, then, whatever may be the extent of its authorising Low's firm to supply the paper at the borrowing powers, any director or shareholder is justiregular price.

fied in paying off that debt : and, if he does so, he has 2nd. That Harmer's having sanctioned the employ

an equity to contribution from the other shareholders. ment of Low's firm on the understanding that they This equity is postponed to the claims of regular crewere to make a profit, the plaintiff, his representative, ditors of the company. could not now complain thereof.

Assuming that a resolution of a board of directors of a 3rd. That the rule only prevented a trustee from company, signed by the chairman, may, if sufficient in its making a profit in respect of his personal trouble,

terms, constitute a proper acknowledgment, so as to revive Matthison v. Clarke, 3 Drew. 3.

against the company a debt originally due from the Here the profit received by Low's firm was not a re

company, but barred by the Statute of Limitations, muneration for trouble, but a compensation for the

yct, risk of carrying on a manufactory. If Low's firm had

Semble, the acknowledgment will be vitiated, if only bought paper, and re-sold it at a profit, then such a

three or four directors were present at the meeting, and profit might perhaps have been disallowed, on the

one of them was the creditor in whose favour the debt ground that buying the paper was part of the business

was being revived. which the inspectors had undertaken to superintend ; but manufacturing the paper was clearly no part of

The Garnett and Moseley Gold Mining Company of such business.

America was established in 1853, and registered in

1854, under the 7 & 8 Vict. c. 110. By its deed of THE MASTER OF THE Rolls held that only the settlement, dated May 30, 1853, the borrowing of any actual cost of making the paper could be allowed. money on bonds or mortgages of the property of the Although the question had usually arisen with refer- company was to be authorised by two successive extraence to the charges of a solicitor or an auctioneer for ordinary general meetings of the shareholders. The personal trouble, the principle of all the cases was that plaintiff was a shareholder from the year 1854, and a a person in a fiduciary position could not make profits director throughout the years 1854 and 1855.

The by employing himself instead of employing others. He mining speculation required a large outlay of capital, remembered the case of the York and North Midland and the company incurred considerable debts. During Railway Company v. Hudson (unreported on this the years 1854 and 1855 the plaintiff accepted four point; see 18 Beav. 76), where Mr. Hudson being bills of exchange for the accommodation of the comthe chairman of that company had bought a quantity pany, and paid to the holders in respect of principal or of iron, and had resold it to the company at a profit. interest the following sums, viz., 1,2471. 14s., 10001., Upon the case coming before him, he held that Mr. 6011. 178. 9d., and 4001., and the bill alleged that all Hudson was the agent of the company, and must these sums were still due to the plaintiff. All these therefore refund the profit he had made. Of course, payments, however, were made more than six years the general rule might be excluded by a special con- previous to the filing of the plaintiff's bill, with the tract either embodied in the instrument creating the exception of two sums, viz., 4001. principal, with trust, or entered into subsequently. He thought that 281. 16s. 6d. interest, paid the 17th of December, the facts very nearly established such a subsequent 1855, and 6001. together with 11. 178. 9d. interest, paid contract as regarded Harmer, but that would not in February, 1856. The company received for their own have affected the other creditors, and it did not appear use the proceeds of the various bills of exchange when that the rule of the Court was present to Harmer's discounted. None of these loans, however, received mind.

beforehand the sanction of the shareholders. The

arrangement on each occasion was authorised by the Vote.-See

board of directors, there being present at the meeting Collins v. Carey, 2 Beav. 128 ;

not more than three or four directors, and of these Christophers v. White, 10 Beav. 523.

the plaintiff was always one : and the plaintiff relied on the resolutions in the minute book of the board of directors, signed by the chairman, as constituting so many agreements by the company to repay to the

plaintiff the sums paid by him, together with interest plaintiff attended a meeting of the board of directors, at 5l. per cent. The resolution as to the acceptance at which were present three other directors besides of the first bill of exchange for 1,2001. was dated May himself; and what took place was recorded in the 24, 1854, and was as follows.

following minute, duly entered in the minute-book, "In reference to resolution 5 of last meeting- and signed by the chairman

“ • As there were no funds to meet the bill of ex- “Mr. Lowndes (the plaintifi) brought before the change for 10001. due this day, it was arranged and board the question of his claim upon the company, agreed that Mr. Lowndes should give his acceptance and called upon the board to hand over to him 2, 400 for 1, 2001. at three months from this date, to Mr. shares mentioned in the resolution 3 of the meeting Cornelius Boyle, and that that gentleman be reqnested held on the 24th of May, 1854, resolved, to discount the same at his banker's, the company "That the board consider they have no power to agreeing to pay the interest; and, upon this arrange- hand over such shares to him, but give him the option ment being carried out, the secretary is to be autho- of taking any number of shares not exceeding 1,600), rised to hold 2,400 scrip shares as security to the at par, in liquidation of 1,6001., part of his claim, payee of the acceptance at maturity on 27th of August within one month from this date.'” next.'

On the 3rd of September, 1856, the company was “The chairman having succeeded in discounting duly registered in England as a company with limited Mr. Lowndes' acceptance for 1,2001. at 61. per cent., liability, under the Joint-Stock Companies' Act, 1856. handed a cheque to the secretary for the amount, less At two extraordinary general meetings of the sharethe discount 181. 148. 9d., or 1,1811. 58. 3d., which he holders, held respectively in November, 1860, and paid into the company's bankers, resolved

January, 1861, resolutions were passed requiring the That the arrangement respecting the 2,400 shares company to be wound up voluntarily, and three perbe carried out, and that the same be handed over to sons were appointed liquidators. The plaintiff applied Mr. Lowndes upon his paying the said acceptance as to the liquidators for the satisfaction of his claim, bat a collateral security, and that a copy of this resolution on the 23rd of July, 1861, the liquidators formally be given to Mr. Lowndes.'”

declined to entertain it, on the ground that it was No shares of the company were ever set apart in barred by the Statute of Limitations. The plaintiff pursuance of this agreement, as security to the plain then, on the 30th of November, 1861, filed his kill till. The arrangements respecting the other bills of ex- against the company and the three liquidators, alleging change subsequently accepted by the plaintiff, appeared the above facts, and praying-Ist, for a declaratim to have been similar, except that no provision was made that the said debts, with interest thereon respectively for any collateral security in the shape of shares, and at 5l. per cent. per annum from the respective times that the reference to them in the several resolutions of payment by the plaintiff, were valid subsisting debts of the board of directors was in much briefer terms. of the company to the plaintiff ; 2nd, for an injune

The plaintiff also contended, that these agree- tion against the defendants, restraining them from ments had been subsequently ratified by the share- paying in preference to the said debts due to the holders. At a general meeting held on the 7th of plaintiff any other debts of the company of the same September, 1854, a report and balance sheet were degree, and from completing such winding up withsubmitted to the shareholders by the directors. The out paying or providing for the debts due to the report informed the shareholders of the necessity of plaintiff.; 3rd, that (if necessary) the voluntary windraising money to meet the large debts already incurred ing up of the company might be continued, subject to by the company, and plainly intimated that the the directions of the Court. directors had made advances out of their own pockets, The defendants put in a general demurter to the and in the balance sheet the company was debited bill for want of equity, and also a plea to the jurisdicwith the sum of 1,2001. to the plaintiff. Again, at a tion, on the ground that by the Joint-Stock Comsubsequent meeting of the shareholders, held on the panies' Acts of 1856, 1857, and 1858, the cognisance 28th of August, 1856, another report was submitted to of the plaintiff's claims belonged properly to the the shareholders which contained the following sen- Court of Bankruptcy in London, and not to the Court tence, “There has also been expended in machinery of Chancery. The Vice-Chancellor overruled first the and works the further sum of 12,2341

. 38. 7d., of which demurrer, on the ground that it was incompatible with 40001. was borrowed on the security of the mines, a plea to the jurisdiction, and then the plea, as not and which still remain charged therewith, and sustainable at law.

The arguments aud judgment are 8,2341. 3s. 7d. is due upon simple contract debts.” reported 2 John. & Hem. 282. The balance sheet accompanying the report, debited the The cause now came on to be heard upon motion for company to creditors with the sum of 12, 2341. 3s. 7d., a decree. and evidence was given on behalf of the plaintiff to show that this sum included all his advances; and Sir Hugh Cairns, Q.C., and Homersham Cax, for the that the fact was so stated in the course of the discus. plaintiff. sion at the meeting. On the 4th of June, 1856, the

1st. The company received the benefit of the ad

vances, and cannot therefore dispute the original Sir Hugh Cairns, Q.C., in reply. validity of the debts to the plaintiff,

The present case has nothing to do with the borrowing Ex parte Chippendale, Re German Mining Com- powers of the directors. The plaintiff, having advanced pany, 4 De G. M. & G. 19;

money to pay the debts of the creditors of the comRe Magdalena Steam Navigation Company, John. pany who had supplied necessaries to the company, 690;

stands in their shoes-is their equitable assignee. The Ex parte Bignold, Re Norwich Yarn Company, plaintiff has a right to have his debt constituted.

22 Beav. 143 ; Troup's Case, Re The Electric Telegraph Company Wood, V.-C.- The chief point at issue in this case of Ireland, 29 Beav. 353;

is now settled by the decision in the case of The GerBuker's Case, Re The National Patent Steam Fuel man Mining Company. No company which carries Company, 1 Drew. & Sm. 55 ;

on business as a going concern, involving large curEx parte Sedgwick, Re The Court Grange Silver rent expenditure, can so use any provisions in its deed

Mining Lead Company, 2 Jur. (N. s.) 949. of settlement, which fix the amount of its capital and 2nd. The resolution of the board of directors on calls or limit its borrowing powers, as to relieve itself 4th of June, 1856, was an acknowledgment to take from liability to creditors who have supplied labour or the case out of the operation of the Statute of Limi- materials to carry on the business of the company. tations.

The only effect of such provisions is, that if the borrow(a) The promise to pay, which constitutes an essen- ing powers have been exhausted, the directors are distial part of a valid acknowledgment, need not be abled from borrowing money on the security of the express ; nor need the exact amount of the debt be company ; in other words, if persons advance money to specified,

pay off these debts, they cannot acquire the rights Prance v. Sympson, Kay, 678 ;

of creditors against the company. But the company is Sidwell v. Mason, 3 Jur. (N. s.) 649.

not the less bound to pay these debts. Under these (6) The signature of the chairman was that of an circumstances, any director or shareholder is justified authorised agent within 19 & 20 Vict. c. 97, s. 13. in advancing money for the purpose of paying the

debts; and, if he does so, he has an equity for conRolt, Q.C., and J. Pearson, for the defendants. tribution from the other shareholders ; only this equity

1st. The debt never was the debt of the company, is postponed to the rights of the regular creditors of and the resolutions of the board of directors, on which the company. The existence of this equity, so far the plaintiff relies, were only so many acts of assump- from enlarging the liability of the shareholders, as was tion on the part of the directors, by which they contended at the bar, is highly beneficial to their inteborrowed money in violation of the deed of settle-rests. Were it not allowed, directors would have no ment. The shareholders never ratified this borrowing, option but suddenly to stop the company, whenever nor indeed were they sufficiently apprised of it by the there was a temporary lack of funds to meet a pressing vague reference contained in the reports and balance demand, even if it was certain that funds would come sheets submitted on the 7th of September, 1854, and in the next week. 28th of August, 1856 ; certainly not, considering that The first question, then, is—whether these moneys the person making the advances to the company was a were advanced by the plaintiff to satisfy existing debts director,

of the company ? On this point the liquidators are 7 & 8 Vict. c. 110, s. 29 ;

entitled, at their own expense, to an inquiry ; but, Murray's ExecutorsCase, Re Universal Salvage looking to the reports and the balance sheets delivered Company, 5 De G. M. & G. 746.

at the general meetings of September 7, 1854, and The debt, if a debt at all of the company, was a August 28, 1856, I think there is strong prima facie legal debt; the Statute of Limitations was therefore evidence that the advances were made to meet the applicable.

debts of the company. 2nd. But the resolution of the 4th of June, 1856, Assuming that they were so, the next question is was an insufficient acknowledgment.

with respect to the Statute of Limitations. I think (a). It is an admission, not of a debt, but a claim, that this Court would consider the period of time fixed and is no promise to pay,

by the statute for a bar in the case of a legal debt, Hart v. Prendergast, 14 M. & W. 741.

to be a bar to the enforcement by the plaintiff of his (6). It is not made by the company which it is equity to a contribution. Two of the sumns, however, now sought to make liable, nor by persons duly advanced by the plaintiff were clearly advanced within authorised to represent the company for the purpose of six years previous to the filing of his bill —viz., the making the acknowledgment. The directors could no sum of 4001. and interest paid on the 17th of Decemmore revive than create a debt of this kind against the ber, 1855, and the sum of 6001. and interest paid in company.

February, 1855. With regard to the claim for the 3rd. The plaintiff should seek redress in the Bankother sums, the lapse of time is a fatal objection, unruptcy Court.

less the resolution of the board of directors, on the


4th of June, 1856, is a sufficient acknowledgment. the defendants filed a cross-bill and interrogatoria Under no circumstances could it be an acknow. within the same period :ledgment for more than a part of the plaintiff's Held, that the plaintiff in the cross-suit was entid!! debt, to which alone it refers. But I am of opinion to have his bill answered first. that it is not an acknowledgment at all, such as the Whether this would have been so, if the interima. law requires to revive a debt. The resolution speaks tories in the original suit had been filed in proper trik', of "the claim ” of the plaintiff, not of a liquidated quære. or admitted debt. It simply amounts to this--a state

The bill in the suit of Garwood v. Curteis was film ment that a claim has been made, and that the directors

on the 3rd of December, 1863, and served on the 9th ; offer terms for a settlement of part of the claim : it is that in Curteis v. Curteis, which was in the nature of a not an admission of the claim, or a promise to pay the

cross suit, was filed on the 10th of the same month, whole or part thereof, whether or not the terms and the interrogatories in the latter suit on the 23rd offered are accepted or not. There is also another of December. No interrogatories were filed in the objection. Assuming that in ordinary cases a board of original suit within the time limited by the Comudirectors is capable of giving an acknowledgment on

solidated Order XI. : but, on the 7th of January, behalf of the company, and that the chairman in 1864, the plaintiff in that suit obtained, on summons signing a resolution represents all the shareholders, I

at Chambers, an order extending the time for firing think it very questionable whether a board, consti

interrogatories, which were filed accordingly on the tuted as this was—of only four directors, one of them

11th. being the plaintiff ---could pass a resolution protracting

On the 18th of January an order was obtainei bị the liability of the company to one of themselves, who

the plaintiff in Garwood v. Curteis, extending the was himself present as director, and who voted in favour

time for answering the cross-bill. of the resolution. The plaintiff, therefore, cannot

On the 30th of January, an exparte order was ohclaim repayment of any sums advanced by him more

tained by him to stay all proceedings in the cross-suit than six years previous to the filing of the bill.

till the plaintiffs in the cross-suit should have put in regret to come to this determination, for the plaintiff's

an answer in the original suit. is a righteous claim : and, as the company has thought fit to resist all his demands, even those which are not Giffard, Q.C. (B. B. Rogers with him), now more! only just, but which can be enforced in this Court, I that this order should be discharged, shall give the plaintiff the costs of this suit.

1st. Because the plaintiffs in the cross-suit bad

been the first to file interrogatories. Minule.- Declare the plaintiff entitled to be repaid

2nd. Because the suits were not strictly cross-suits. the sum of 4281. 16s., paid by him on the 17th of December, 1855, and interest upon 4001. at 5l. per cent. as Batten, contrà, contended that formerly, whil from that date ; and 6011. 178. 9d., paid by himn in the interrogatories formed part of the bill, it was February, 1856, with the like interest upon 6001. from the right of the plaintiff in the original suit to that date. Declare him not entitled to the repayment of have an answer to his bill before he answered the the other sums mentioned in the bill, the payment cross-bill ; and that now the plaintiff in the original thereof having been made more than six years previous suit stood in the same position, whenever he filed bis to the filing of the bill. An account, in case the parties interrogatories so as to make them part of the record. differ, of what is due from the company to the plaintiff The right to priority of answer could only be lost his on the footing of the above declaration, after allowing amending the bill, and even then, not till the plaintiff such sums as may be due from the plaintiff in respect in the cross-suit obtained an order staying proceedinu of calls or otherwise ; the defendants, the liquidators

, in the original suit till the cross-bill was answered. to pay the same to the plaintiff, after providing for the He cited, debts of the company ; the plaintiff to be at liberty,

Harris v. Harris, T. & R. 165 ; under the directions of the Judge in Chambers, to take

Smith's Chancery Practice, 744 (7th ed.); steps for the recovery from the shareholders of the Noel v. King, 2 Mad. 392. residue unpaid by the liquidators. Tax the costs of If the plaintiff in the original suit were to los his the plaintiff : the defendants, as liquidators, to pay right of priority in this case, it must follow that if a

bill and cross-bill were filed, and the interrogatories to

the cross-bill were filed before those to the original Wood, V.-C. GARWOOD v. CURTEIS.

bill, the priority would be lost, even though the inter} 19 FEB. 1864. CURTEIS v. CURTEIS.

rogatories to the original bill were filed within the

the same.

proper time.

Practice --Bill and Cross BillPriority of


He also contended that the suits were properly cross suits.

A plaintiff having filed a bill, neglected to file inter. Wood, V.-C., said, that under the old practie, rogatories within the time fired by the Orders. One of when the interrogatories formed part of the bill, and

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