The General Provident Association Company, Limited, Chief office, 370 Strand, E. A. Chaston, Esq. London, November 17, 1866. "National Bank, Camden Town. "Dear Sir,-On the part of our company, I can only say that we shall be only too happy to confine our banking operations to yourselves, provided you will oblige us with the amount of accommodation we at present require, say to the sum of 5,000l., which we could cover by deeds. Our engagements are being reduced every week, and on the other hand business is daily increasing, our shares. are also being taken up, consequently, our capital is increasing, so that shortly we shall not need accommodation. ing your reply, I am, &c. Await "(Signed) Thos. Heywood, Manager." The articles of association of the company, in clause 7, provided that the directors should have the custody of all the property of the company; and clause 13, as to the borrowing powers of the company, provided as follows-"The directors may from time to time, as in their judgment they may deem expedient, by a resolution. of the board, borrow any sum or sums of money, for the purposes of the company. And the directors may raise any such sum or sums aforesaid by mortgage of, or charge upon, all or any part of the company's estate or effects, or by debenture, bond, bill of exchange, promissory note, or other security." As to the powers and duties of the directors, the 63rd clause amongst other things enumerated, "The entering into contracts for the company, and the contracting on behalf of the company, of such debts and liabilities as are, in the judgment of the board, necessary in transacting the business of the company." The 64th clause provided that "the board should, in addition to those powers and duties, exercise and perform all such other powers and duties as by the statutes and these presents respectively are di rectly or by implication conferred and imposed on directors." And the 69th clause provided as follows-" All policies, deeds, mortgages, charges, debentures, bonds, and other securities, made and executed on the behalf of the company, may be made in such form and contain such powers (including powers of sale), provisoes, conditions, covenants, clauses and agreements, as the directors shall think fit; and in addition to being sealed with the seal of the company, shall be signed by two directors, and countersigned by the secretary or actuary, and when so sealed, signed, and countersigned, shall be valid securities and conclusive and enforceable against the company, without the necessity of proving any other matter than their being executed in manner hereby prescribed." Mr. Graham Hastings, for the National Bank, in support of the summons.—First, the deposit of the securities with the bank was a deposit intended to secure all discounts or advances for which the company were liable, whether made directly for the company or indirectly for third persons. [The Vice-Chancellor expressed his dissent.] Secondly, a mortgagee is entitled, as against the executor of his mortgagor, to retain the balance in his hands of the proceeds of his security towards satisfaction of a simple contract debt due to him from the mortgagor. There is, as regards creditors, a complete analogy between the condition of a company which has passed into liquidation and that of a person who has died. In the one case, all debts are a charge upon the estate, by virtue of the Companies Act of 1862, in the others they are so by virtue of the Act of 3 & 4 Will. 4. c. 104. The pre cise point in this case was decided, with reference to assets in the hands of a mortgagee as against an executor, in Hazelfoot's case, 41 Law J. Rep. (N.S.) Chanc. 286; s. c. Law Rep. 13 Eq. 327; which followed Spalding v. Thompson, 26 Beav. 637; and therefore, as against the liquidator in this case, the mortgagee is equally en titled to retain towards the payment of his simple contract debt the balance in his hands after the payment of the se cured debt. Mr. Higgins, for the liquidator.-The argument on the other side proceeds on the assumption that the National Bank has a valid charge. That is not the case; first, because the equitable charge was not registered, according to the 43rd section of the Companies Act of 1862; and secondly, because the formalities prescribed by the 69th clause of the articles of association were not complied with. Upon the first point, in Re The Wynn Hall Company, 39 Law it was decided that a mortgagee who was and in The General Provident Assurance where the mortgagee was the solicitor of the company. These cases are applicable to the present, because the bankers of a company are likewise in a fiduciary position towards the shareholders. This is shewn by the 100th section of the Companies Act of 1862, which places the banker of a company in the same category with officers of the company; and to admit the doctrine of Hazelfoot's case (ubi supra) to be applicable to the present would be to abrogate the 43rd section of the Companies Act entirely. Suppose property to the value of 10,000l. was equitably mortgaged by directors to secure 1,000l., and that the charge was duly registered, and then that the persons entitled to the charge got hold of bills to the amount of 9,000l. aliunde; they would then, according to the contention of the other side, get the benefit of a mortgage for 10,000l., although their mortgage on the register was for 1,000l. only. NEW SERIES, 41.-CHANC. Upon the second point, the 69th clause of the articles of association provides that every mortgage must be sealed with the seal of the company, signed by two of the directors, and countersigned by the secretary. There is here no power to mortgage, except for a special purpose, and in this special manner, and the borrowing power of the company was never duly exercised. It would be most mischievous to place it in the power of careless or fraudulent officers of a company to pledge its property by an informal proceeding, and therefore it is that the legislature has interposed the check of registration under the 43rd section, and the company itself had, by the 69th clause, required the solemnity of a deed. Mr. Graham Hastings, in reply.-The cases cited were decided upon the ground that the fiduciary relationship between the officers of a company, such as its directors or solicitors, threw upon them the obligation of seeing that every formality was duly complied with, and that such officers could not avail themselves of charges in their own favour if they neglected to do so. In each case the mortgagee was estopped by something personal to himself; as in Re The Wynn Hall Company (ubi supra) and in Re The Patent Bread Company (ubi supra), by being a director; and in Brandon's case (ubi supra), by being the solicitor of the company. But here no such fiduciary relation subsists, for the banker is not an officer of the Company. In Re The Patent File Company, 40 Law Law Rep. 6 Chanc. 83, it was argued, that, where the articles of association of the company require special formalities, the common law right of the directors to deposit property of the company could not be exercised without such. formalities; but Mellish, L.J., said that he could find nothing in the articles of association, or in the Act of 1862, to prohibit directors from making a mortgage by deposit; and that case is an authority for the proposition that the 43rd section 5N does not interfere with such common law right. In Re The Patent Bread Machinery Company, Law Rep. 7 Chanc. App. 289, James, L.J., said that such a charge was not void for want of registration under the 43rd section, although he held that the solicitor could not avail himself of it. In the case of Re The Athenæum Society, ex parte The Eagle Company, 4 Kay & J. 549, where the deed of settlement required certain formalities to be observed in the issue of any policies, it was held that an agreement to issue policies, signed by three of the directors, although without such formalities, created a good equitable debt. If the liquidator had filed a bill to redeem these securities, he could not have redeemed them except upon the terms of paying off the simple contract debts as well as those covered by the mortgage. Mr. Higgins, in reply upon the new case. In Re The Athenæum Society (ubi there was a distinction in the 38th clause of the deed between completed instruments, which required formalities, and "other contracts" which did not. MALINS, V.C.-This case involves points of considerable nicety, upon which it is difficult to form a satisfactory conclusion. The first point which was made by Mr. Graham Hastings on the part of the National Bank was that this was a deposit to secure all bills which were accepted by this society, whether discounted by the society itself or by any totally indifferent person. To that argument I expressed my dissent very early in the case, and after all I have heard I am still clearly of opinion that the true meaning of it is not that the securities were to be held for every bill accepted by the society that might come by any means whatever into the possession of the National Bank; but that it meant, as it implied, a collateral security for bills under discount for the General Provident Society, and no other person or society. Although that is not actually said, it is clearly implied. I am therefore unable to come to the conclusion that they were entitled by virtue of the mere memorandum to hold the balance in their hands after satisfying the bills actually discounted for the company, as against any debts or bills discounted for other parties. The objection made by Mr. Higgins on behalf of the liquidator is that the mortgage is altogether invalid, because the 69th clause of the articles of association provides that all mortgages must be executed with certain ceremonies. [His Honour here read that section and proceeded.] Now that clause does not expressly say, but I think it necessarily implies, that when not so sealed, signed, and countersigned, securities made on behalf of the company shall not be valid. And I think it would have been well if the Courts had resolved never to give effect to any mortgage on behalf of these companies by deposit of title deeds or otherwise, unless these requisites had been first complied with; because it is a great safeguard to the shareholders that these ceremonies should be gone through. It would be a great restraint on careless or fraudulent directors and officers of the company, that they could not create a mortgage upon the property of the company without going through all such ceremonies as these which are prescribed here. That point was early brought to my attention in Brandon's case (ubi supra), where Messrs. Brandon, the solicitors of this very company, had obtained a mortgage as to which the ceremonies prescribed had not been complied with. In that case my decision turned upon the fact of their being the solicitors of the company, and I held that inasmuch as they were the solicitors of the company, it was a duty imposed on them to see that all mortgages were in compliance with the rules, and having taken the mortgage in question without so doing, that it was altogether invalid. Indeed, I should not have hesitated at that time to have decided the general point that every mortgage of a joint-stock company in which those requisites are not complied with according to the articles of association, should be held to be invalid. I think it would be as well if it was so decided. However, I find that has not been so. The case of Re Athenæum Life Assurance Society (ubi supra), decided by the present Lord Chancellor when ViceChancellor, breaks in upon that principle and lays down that it is not necessary to comply with all those ceremonies. And that was also stated to be the case in the Patent File Company's case (ubi supra). There Lord Justice Mellish, in giving his judgment at page 88, distinctly states this-"The third objection is the only one that could raise any serious doubt; namely, whether a joint stock company of this kind can raise money or give security for a past debt by deposit of title deeds. It was urged that no company can mortgage unless expressly authorised to do so. Now, the company has property which it is authorised to deal with; and I should say that the true rule is just the contrary; namely, that the company can mortgage unless expressly prohibited from doing so. The 43rd section of the Act appears to recognise the creation of mortgages as an ordinary incident to a company. The memorandum in the sent case mentions as a purpose of the company the disposing of its landed property. The articles give to the directors the whole powers of the company subject to the provisions of the articles, and of the Companies Act, 1862, and I cannot find anything either in the Act or the articles to prohibit their making a mortgage by deposit." That, therefore, gives a sanction to their mortgaging without complying with these ceremonies. pre Again, in the case of The Patent Bread Machinery Company (ubi supra), also before the Lords Justices, Lord Justice James says -"I am of opinion that the judgment of the Master of the Rolls must be affirmed. I agree with the argument for the appellant that there was power to give such a mortgage as this, and that it is not made void by want of registration: " that is under the 43rd section: "but as it is the duty of the officers of the company to see that every charge specifically affecting property of the company is registered, I am of opinion that no director, manager, or other officer of the company, can avail himself of a charge which is not registered." That decision is entirely in accordance with the formal decision which I gave in the Wynn Hall Company case (ubi supra). It does not seem to have been cited in the case I have referred to, but it is in entire accordance with it; and that is, that no officer of the company can obtain a security unless registered under the 43rd section, and unless the ceremonies I have mentioned are all complied with. But I have had occasion to consider, and I have already decided the question, whether a banker of a company is its officer. He is mentioned specifically in the 100th section of the Act as a person against whom certain remedies may be had as to production of papers, and so on. It was argued before me in the case of The Imperial Land Company of Marseilles against this very bank, that because the bankers were mentioned amongst the officers of the company, therefore they were officers within the meaning of the 165th section; but I then decided that an officer of the bank is not an officer of the company. The mortgagees in this case are the bankers of the company, and therefore I must treat them as if they were indifferent mortgagees. The result, therefore, to which I am obliged to come is, that the deposit of the title deeds created a valid mortgage, although the ceremonies required by the deed of settlement were not complied with, and although there was no registration under the 43rd section. This then being a valid transaction, the next question is for what is it good? It is admitted by Mr. Hastings, as representing the National Bank, that the precise transaction for which the deposit was made has been covered, and is paid. The bills have been discounted and paid, and there is nothing due therefore within the exact terms. The real point in dispute, then, is whether the bankers can retain the balance of 4001. or 500l. which it is admitted will be in their hands after paying the bill which falls literally within the description of that for which the security was given, or whether they are bound to hand it over to the official liquidator. It is a case in which the security given is more than enough to cover the precise debt for which it is given, and there being a balance in the hands of the creditors the question arises, can they retain it against a debt due irrespective of that debt, or must it be paid over to the mortgagor? Now that is the precise point which was decided in Hazelfoot's Case, by the Master of the Rolls, and it had previously been decided, as he states in his judgment, by himself in Spalding v. Thompson (ubi supra). In Hazelfoot's Case (ubi supra) the question was whether the mortgagees, Messrs. Chauntler and Crouch, were bound to hand over a sum of 617. 128. 4d. in their hands, or were entitled to retain it against their general debt, namely, their bill of costs, and the Master of the Rolls considered they were entitled to retain the amount of the bill of costs out of the balance in their hands. His Lordship in his judgment cited Spalding v. Thompson (ubi supra), in which a mortgage to secure a government debt had been created by Lord Suffield, and where he had decided that the mortgagee was entitled to retain against his general balance. His Lordship says at page 331, "This is not a question of set-off. The question of set-off arises where there are different payments by a testator to a stranger, and by the stranger to the testator, and different rights in respect of such payments. That might arise in such a case as this." He then goes on to illustrate that proposition. Now it seems to me on this general principle, that if A. creates a mortgage in favour of B., and the mortgage being realised B. has the balance in his hands, the question is, can A., the mortgagor, require B. to pay that balance over while he is still indebted to him? It would be said by A., I gave you this as a security for a particular debt, say 1,000l., the estate has realised 1,500l., you have been paid all the 1,000l., now pay over to me the 500l. If the mortgagor owes B. on another account 1,000l., natural justice seems to say that the 1,000l. would have to be paid before paying over the balance. In other words, that the mortgagee is entitled to apply the balance in his hands towards the payment of the general debt. That is what the Master of the Rolls decided in Hazelfoot's Case (ubi Waste-Timber -Account-Tenant for life and Remainderman—Statute of Limitations Time from which Statute runs. The right to an account in equity of the proceeds of timber wrongfully felled in commission of waste, is only incident to the right to an injunction. Where after legal waste has been committed time has run so as to bar the legal remedy in respect thereof, the remedy in equity is also barred. In a case of legal waste in cutting timber committed by a tenant for life, the Statute of Limitations begins to run as against the remainderman from the time of the waste being committed, or at all events from the time when the proceeds of the timber became money in the hands of the wrongdoer, and not from the time when the estate in remainder falls into possession. This was an appeal from a decision of Bacon, V.C. In October, 1841, Mary Higginbotham. being owner in fee of the Alresford Hall Estate, Essex, demised the same to W. |