Roxburgh, for the motion, cited Taylor v. Hughes (1).

Mr. Russell, Mr. James Parker and Mr. Terrell, for the official manager, contended that, under the deed of settlement, it was not within the power of the company to enter into the arrangements under which Mr. Morgan sought to escape from his liability as a shareholder, and referred in this respect to the 22nd and 23rd clauses of the deed of settlement. If, however, it was competent for the company to enter into such arrangements, as the meeting at which the resolutions were passed was informal, such resolutions were a nullity.

KNIGHT BRUCE, V.C.-The counsel for Mr. Morgan very properly have not entered into the question, whether he is liable or not liable to any or all of the unsatisfied creditors of the company, who became so after the 18th of June 1844. He may or may not be so. I give no opinion upon it. That question I consider not before me. Several questions relevant to the present discussion have been raised during the argument, upon which I do not think it necessary to express an opinion, as there is one view of the case upon which my mind is made up, and which renders it quite immaterial in my judgment to enter into any other. I am of opinion that it is a just inference in point of law and fact, from all the particular circumstances of the case taken together, that every individual shareholder, present or not present at the meeting of the 10th of April 1844, and represented or not represented at that meeting, has acquiesced in the resolutions passed at that meeting, whether they were well passed or not well passed. Being of that opinion the consequence is, that I must hold every individual shareholder bound by the transaction of which the assignment or transfer of the 18th of June 1844 was a completion. My judgment therefore is that, as between the several persons concerned in this company, between whom alone the present jurisdiction is to be exercised, it ought to be taken, that as to any losses which have arisen since the 18th of June 1844 Mr. Morgan is not liable. I think, therefore, that the list should contain such qualifi

cation.

(1) 2 Jon. & Lat. 24.

The motion now came on to be heard, before the Lord Chancellor, by way of appeal.

Mr. J. Russell, Mr. Terrell, Mr. Bacon, Mr. G. L. Russell, and Mr. Toller appeared for the different parties.

The LORD CHANCELLOR.-There is no doubt this is an extremely hard case. It is quite clear no harm was meant by the transaction which took place. The party thought that by the arrangement he entered into he was relieved from all responsibility; but the difficulty occurs, and a very great difficulty, considering the ground on which the Vice Chancellor proceeded, from the shape and form in which this question arises. The way in which it arises is, that the Master is called upon under the act to make out a list of contributories, that is to say, a list of all persons who may be liable to contribute to the exigencies of the company, to make good the funds of the company. It is quite clear, therefore, that he was bound to include in that list all those who may be liable under any circumstances; although as against any particular shareholder there may be an equity to protect him. Suppose, for instance, it should appear, a shareholder was conusant of all this, that he was present at all the meetings, that he assented, and that he was privy to the purchase, and that that particular individual should hereafter, upon the winding up of affairs, call on Mr. Morgan to contribute in respect of his liability subsequent to 1844 towards the loss he is called upon to pay; in such a case as that there may be an equity that may arise between individuals, although I cannot tell what; for we have not the facts of such a case before us. I think the Master was bound, under the act to place this individual upon the list of contributories. He cannot enter into the question between each individual shareholder. The question is, is he shareholder as between himself and the company? Is he, under any circumstances, liable to contribute towards the fund? Now, this is a company; it is no corporation; it is a mere partnership; and although the majority of the partners may bind the minority upon every point which the deed authorizes, by their common contract, yet they have no authority whatever to bind the minority

upon any matter that is not within the common contract. Now, the question is, what was the common contract? I find a deed prepared which is the origin of the company certainly, and under that deed (because there is no other contract in existence but that deed) certain persons come in and are shareholders (whether they became shareholders originally or by purchase is not very material) by which they take on themselves the liability of the company. They take on themselves the liabilities of the contract under which the company is acting; it is equally binding on those who sign the deed as on those who become shareholders with them. I should think this deed, although not executed by this individual, was a deed binding on him. We all know, unfortunately, that parties enter into these arrangements without knowing anything at all about the contract, or what the liabilities are into which they are entering; and therefore when any question arises upon it, you must look and see what has been done.

Now, here is a deed regularly executed by the directors, not executed by Mr. Morgan himself it appears; but still it was a deed that constituted the formation of the contract between the parties. Under that deed I find certain provisions made; I find that a party, once a shareholder, has only certain modes by which he can be relieved from the effect of the liabilities which that situation imposes upon him. He may assign his shares; but that assignment will not relieve him, if it is done without the assent of the directors. If he assigns, and the party to whom he assigns is accepted by the directors, and the assignment is with the approbation of the governing body, no doubt from that moment he would be relieved from any liability subsequent to that transaction; because he ceased to be a party under the provisions of that deed. Not only may he escape in that way, but it may be by an arrangement with the directors themselves; but then that arrangement must be under the circumstances provided for by the deed. The 22nd section provides that the directors shall keep in the hands of their bankers a balance equal to the current expenses of the company, and that whenever the balance exceeds the current expenses it shall accumulate and constitute a surplus fund, and shall remain invested in a prescribed mode;

but then the directors were to be at liberty under the 23rd section to invest, not any partnership funds, but only the surplus funds. They may from time to time by and out of the surplus funds herein before mentioned purchase and buy up any share or shares in the capital stock of the company which shall be offered for sale, and shall at their discretion either sell the same or merge it in the company. That being the only clause under which the directors could purchase shares at all,-I mean generally, because no doubt there are particular cases provided for ;-but that being the only clause under which generally they could purchase shares, they are only authorized, as between themselves and the shareholders for whom they are acting, to purchase shares by having a certain fund out of which the purchase could be made. Then the 44th section provides, that "whenever any share or shares in the capital of the company shall become actually forfeited, or shall be duly and effectually vested in any new proprietor, and such entry or alteration in regard to such share or shares shall have been made in the share register book as hereinbefore required, then and not before, the responsibility of the previous owner, as a proprietor of the company, with respect to the same share or shares, shall from and after the completion of such entry and certificate granted as aforesaid, and the payment of all instalments on such shares previously called for, cease and determine as to the same share or shares." Now, that is an express provision, though it was not necessary to make an express provision for any such purpose, stating that anything that was done that was not within the power of the deed should not exonerate the person assigning. It is quite clear, therefore, that, under the deed itself, the directors had no power to purchase under the circumstances in which they did purchase, because they were only to purchase out of a surplus fund, and there was no surplus fund. The case is, that there was the reverse of a surplus fund; for all this was done for the purpose of creating, not a surplus fund certainly, but a fund that was necessary for the objects of the company. It was a transaction therefore in which the shareholder had not adopted that course, by which alone under the provisions of the deed he was to escape from the responsi

bility incident to his position as a shareholder; and that seems to have been the opinion of the Vice Chancellor; because, no doubt, if he had thought that the liability ceased under any of the powers in the deed, he never would have resorted to the ground on which he did put it; namely, that he escaped, not from any power in the deed authorizing it, but on account of the transaction that took place. I think there was a common mistake on the part of Mr. Morgan and those with whom he was dealing that under the powers of the deed, what did take place would exonerate him. He did not sell to a stranger with the concurrence of the directors; nor did he deal with the directors under the only power they had of dealing; namely, that which was conferred by the 23rd section; but a meeting is called for the purpose of raising a fund. It was argued, that this was a mode of raising a fund; and that the company was in want of funds. To be sure, under a general notice that you want to raise a fund, you might suppose the most extraordinary resolutions to be passed, which might be about as equally valid as if they were to vote that it should be taken out of the first man's pocket they might meet in the street. They do not specify what they propose to do to raise funds; but merely state that the company propose to call a meeting to say they want funds. The question is, how those funds are to be provided. That is what the parties meeting has to consider. The parties are merely told in the notice that they are to meet to consider the propriety of raising funds. The only way in which they can raise a fund is to raise it by some legitimate means. There was no notice whatever that such a thing would be done as was done ultimately at this meeting. I am also of opinion that the meeting had no power to do what they did. If the deed was binding, it is admitted that they had no power. Being of opinion the deed was binding, they could not go out of the power of the deed. The directors and those who were then met together bound themselves not to dispute what was then agreed upon. That may or may not be binding upon individuals. I am not looking at what individuals are bound by; but is the partnership altogether bound, each

and every of its members, by what took place at a meeting which was called ostensibly for a purpose different from that which was the conclusion to which they came? The object, no doubt, was to raise money; but there is no specification in the notice as to the mode in which it was to be raised. Then as to acquiescence. The thing is not binding on the company as such, and therefore cannot operate as any release to Mr. Morgan. Then, what is there to bind each and every member of the company? because though the partners may, no doubt, however numerous, as other partners may, depart from the general contract, yet they cannot depart from it without the consent of every individual member of it. If what they do is not done within the limits of the contract which they had originally entered into, it is not binding on their co-partners. Undoubtedly they may form a new partnership. Having entered into a partnership for certain purposes and under certain conditions, they may, if they please, among themselves alter the contract and enter into a new contract; but then they cannot bind any one individual : and it cannot be said the partnership, as such, is bound unless all the individuals are bound. They may change the constitution of the company, but that is not what is done. As a partnership, consisting of each and every member who constituted the partnership, they are not bound by any resolution of a majority or of those who may think proper to attend the meeting; least of all can they be bound when they were not invited to attend the meeting with a view of doing that which was ultimately done. It appears to me, therefore, that what was done was no release to Mr. Morgan under the deed; and that the directors had no power to depart from the deed; and as to the company being bound by acquiescence, I cannot enter into that unless I have it proved that each individual constituting the company was present; and I do not understand that to have been the

case.

It is a hard case, no doubt. If any cau tion were wanting in these cases, I think this might be quoted as an instance, shewing how hazardous it is to have anything to do with establishments of this sort, unless the parties choose to look after and to make

themselves masters of all the transactions which may be entered into. No doubt Mr. Morgan has considered that no responsibility attached to him after he had assigned his shares; but in my opinion he continued liable in respect of transactions from which he considered himself entirely free. Such is the law for the present purpose; and in saying that, of course I do not mean to say, that as between himself and individual members he may not have a good defence; but as between himself and the company, as such, I am of opinion that there was nothing in the transaction that operated to relieve him from the situation of a shareholder; and, therefore, in the present position of the question, namely, whether he is a contributory or not, I am of opinion that the Master was right in thinking he was not released from the liabilities of the company by the transaction that took place.

The Vice Chancellor's order, therefore, must be discharged, and the Master's report must be confirmed.

Will-Construction Devise to UsesLapse Residuary Clause - Wills Act, 1 Vict. c. 26.

Certain real estates were settled, on an event which happened, to the use of the survivor of the intended husband and wife in fee. The wife survived. The husband, by his will, devised all his real estates to his wife for life, and after her death to executors upon trust to sell, and subject to certain bequests, &c., gave one fourth of the proceeds to such persons as his wife should appoint, and the remainder equally amongst his executors. All the executors died in the lifetime of the wife, and previously to the date of her will.

The wife by her will (made since the passing of the Wills Act), acting upon the supposition that her husband had intended to include in his will the settled estates, which came to her by survivorship, devised them to the uses concerning the same declared by him in his will:-Held, that the settled

estates were not well devised by the testatrix to the uses of her husband's will, but that they fell into and formed part of her residuary estate.

By indentures of the 15th and 16th of April 1790, made on the marriage of John and Mary Woodhouse, certain hereditaments were settled by J. Woodhouse to the use of himself for life, remainder to the use of M. Woodhouse for life, remainder to the use of the issue of the marriage, and in default of issue, remainder to the use of the survivor of them, J. and M. Woodhouse, and his or her heirs in fee.

Certain other property was likewise settled by indentures of the 2nd and 3rd of August 1797, which it is not material to specify.

There was not any issue of the marriage. J. Woodhouse died in the month of January 1829 and in the lifetime of his wife, who then became absolutely entitled to the settled estates, under the ultimate limitations in the settlements.

J. Woodhouse, by his will of the 4th of June 1816, gave all his real estate to his wife for life, and after her death to his executors John Cheese, Thomas Jeffries and John Fletcher, upon trusts for sale and payment of certain annuities and legacies. One fourth of the residue of the proceeds the testator gave upon trust for such persons as his wife should appoint, and in default thereof, for her next-of-kin; the remaining three fourths he gave equally to his executors.

J. Cheese died in January 1826; J. Fletcher in December 1833; T. Jeffries in November 1839; and Mary Woodhouse in April 1843.

Mary Woodhouse in her will of the 31st of December 1839, after reciting, inter alia, the will of her husband to the effect above stated, and that part of the hereditaments thereby devised by him had been so settled as to have descended upon herself by reason of her having survived him, thus proceeded :— "And whereas I believe it was his wish that the settled lands, &c. should pass by his will to the uses and upon the trusts thereby declared, and I am desirous of fulfilling his wishes, now I do hereby give and devise all and singular the same lands, &c. whatsoever and

wheresoever, to, for and upon such uses, trusts, intents and purposes, and under and subject to such charges, powers, provisoes and agreements as are in and by the will of my late husband expressed, declared and contained of and concerning the same."

The will then recited that the testatrix had since the death of her husband, acquired considerable real estate. This property the testatrix devised to her executors upon trust to sell, and directed the proceeds to form part of her residuary personal estate. The testatrix then referred to the power given to her by the will of her husband to appoint one fourth part of the monies to arise from the sale of his real estates, and in execution of that power appointed the same unto the trustees or trustee for the time being of her will, upon trust to pay and dispose of it to and amongst such person or persons, in such shares and proportions, and subject to the same trusts as she thereinafter gave and bequeathed her own residuary estate, of which she thereby directed the same to be considered and form part. The residue was afterwards bequeathed to certain persons in eight equal shares.

The bill was filed for the administration of the estate of the testatrix, and charged inter alia, in regard to the settled estate and hereditaments specifically devised by her will, the three devisees in trust and residuary legatees named in the will of John Woodhouse being respectively dead at the time of her decease, that to such extent as the devise in her will of the said settled estates and hereditaments to the uses declared by her husband's will had failed or become incapable of taking effect, the same formed part of her residuary estate devised by her will.

Mr. Kenyon Parker and Mr. J. T. Humphry, for the plaintiff, said that the main question related to the settled estates. The testatrix had attempted to devise them to the uses of her husband's will; but all the legatees having died in her lifetime, the devise to them failed, and the lapsed legacies, unless a contrary intention was shewn, fell into the residue, and passed by the residuary clause in the will of the testatrix.

They cited:Youde v. Jones, 13 Mee. & W. 534; s. c. 14 Sim. 131; 14 Law J. Rep. (N.S.) Exch. 70.

Easum v. Appleford, 10 Sim. 274 (affirmed, 5 Myl. & Cr. 56); s.c. 10 Law J. Rep. (N.s.) Chanc. 81. Maybank v. Brooks, 1 Bro. C.C. 84. Hutcheson v. Hammond, 3 Ibid. 128. Sibley v. Cook, 3 Atk. 572.

Jarman on Wills, vol. i. 293, 1st edit. The New Statute on Wills, 1 Vict. c. 26. ss. 24, 25, 26, 27.

If

Mr. Hodgson, for the defendant John Cheese, to whom the trust estates, devised by John Woodhouse had been conveyed by the heir-at-law of the surviving trustee, and also executor of Mary Woodhouse.The testator made a general devise which could not embrace the settled estates. he had survived his wife (the testatrix) he would have become entitled to them. The wife, supposing that her husband intended to include the settled estates in his devise, expressed a desire to fulfil his intentions. She created a power which she supposed her husband intended to give her. She brought the power, and the husband expressed the intention; the Court might combine the two. She afterwards executed that power, and gave the settled estates to such uses as she believed her husband intended. So that to that extent her will might be considered to operate. Although the cestui que use were dead, the uses remained, and the testatrix devised to existing uses. She said that only one fourth should go to her residuary legatees, from which it was evident that she did not intend the remaining three fourths to go in the same way. This was not a gift to persons individually, but to certain uses.

Mr. Lee, with whom was Mr. Lloyd, for James Cheese, the heir-at-law of Mary Woodhouse, submitted that there was no clear intention or necessary implication on the will of the testatrix sufficient to disinherit her heir. The devise of the settled estates, although it failed (for in a devise to uses, there must be cestui que use) shewed that the testatrix did not intend to include them in the residuary clause. Besides, the residuary clause was confined by the introductory recital to