IN THE HOUSE OF LORDS. BAGSHAW v. SEYMOUR. June 29.(a) B., the chairman of a mining company, by falsely representing to the Stock Exchange that twothirds of the shares had been taken and paid upon, procured the stock to be entered in the official list. S., a stranger, knowing the rule, that such stock was not admitted into such list unless two-thirds of the capital had been paid up, and seeing the stock so entered, and relying on the insertion having been procured by honest means, bought some shares from a jobber on the Exchange: Held (affirming the judgment of the Exchequer Chamber in accordance with the ruling of Jervis, C. J.), that S. had a right of action against B. for the fraudulent representation, and there was evidence for the jury of the fraud. THIS was an action for a fraudulent representation by a director of a mining company. The action was commenced in the Court of Common Pleas on the 13th July, 1854. The declaration alleged that the defendant and others had associated themselves together as a company called "The Lake Bathurst Australasian Gold Mining Company," established on the cost-book system for working certain mines in Australia; that the defendant and others, representing themselves to be the board of management of the said company, allotted and issued shares, and issued and circulated, for the purpose of inducing persons to purchase the said shares, a certain prospectus containing a statement that the capital of the company was 100,000l. in 100,000 paid-up shares of 17. each, without any further call or liability; and whereas before and at the time of issuing such prospectus it was, as the defendant well knew, publicly known and understood, and the fact was, that the committee of the Stock Exchange would not appoint a settling day for shares in any mining company, or permit the same to be inserted in the official list of the said committee until it had been represented to the said committee, and they had been induced to believe, that the subscription list of such company was full (with the exception of such shares as might be reserved for special purposes), that not less than two-thirds of the scrip had been paid upon and were ready to be issued, and that there was no impediment to the settlement of the account; that the defendant and the said other persons, in order to procure the insertion of the shares of the said company in the official list of the said committee, and to induce the said committee to appoint a settling day for the said shares, and thus to induce persons to purchase shares in the said company, in the belief that their insertion in the said list had been procured by fair and honest means after the issuing of the said shares and prospectus, and before the plaintiff purchased any shares, falsely and fraudulently represented to the said committee that 40,000 shares had been bonâ fide reserved for the purpose of completing the purchase of the land, that nineteen shares had been bonâ fide kept for circulation in the colony of Australia, and that the residue, viz., 40,711 shares, had been paid upon and for all which scrip certificates had been issued or were ready for delivery, and in order to induce the committee so to believe, the defendant and others falsely and fraudulently represented to them that the produce of the said residue had been (a) 32 Law Times Rep. 81. received by and then was in the hands of their bankers, and thereby the defendant and the said others, for the purpose aforesaid, induced the said committee to believe the said representations to be true, and that there was no impediment to the settlement of the account, and influenced by and acting on such belief the said committee inserted the shares of the said company in the official list of the said committee, and appointed a settling day for shares in the said company. It was further alleged that afterwards, and whilst the said shares were so inserted in the said official list, the plaintiff having notice of the prospectus and having seen the said shares quoted in the official list of the said committee of the Stock Exchange, and believing that the same had been admitted and inserted by fair, honest, and proper means, and that no less than twothirds of the scrip had been paid upon and was ready for delivery, and that the subscription list was full with the exception aforesaid, was induced to purchase, and did purchase on the Stock Exchange, of one John Barclay, one hundred shares in the said company for the price or sum of 931. 158., being part of the shares so issued by the defendant and others as aforesaid. It then alleged that the defendant in and by the said several representations deceived and defrauded the plaintiff in this; that neither at the time of making the said representations to the said committee of the Stock Exchange, nor at the time when the shares of the company were inserted in the said official list, and when the plaintiff saw them, nor at any other time, had 40,000 or any shares been bonâ fide reserved, &c., nor had 19,289 shares been reserved, &c., nor had the said 40,711, nor two-thirds of the said scrip, with the exception aforesaid, been subscribed for or paid upon, nor were they ready to be issued or delivered, nor had the produce thereof been received by, nor was it in the hands of their said bankers; and the said shares ought not to have been inserted in such official list; all which the defendant always well knew. By means of which said several premises the shares so purchased by the plaintiff were of no value, &c. And the plaintiff claims 1507. Pleas-1. Not guilty. 2. The plaintiff was not induced for the cause alleged to make the purchase in the declaration mentioned. 3. The plaintiff did not purchase as alleged. Issue thereon. At the trial, which took place before Jervis, C. J., at the London sittings on the 23d June, 1855, the plaintiff gave in evidence as follows: The defendant was the chairman of the directors, and had published the prospectus in the declaration mentioned, and issued some shares for sale, including those bought by the plaintiff. There was a rule on the Stock Exchange, known to the plaintiff and defendant, to the effect stated in the declaration. That the defendant and other directors addressed a letter to the committee of the Stock Exchange, alleging that their share list was full, with the exceptions stated in the declaration, and that two-thirds of the scrip had been paid on and were issued or ready for delivery. In order to satisfy the Stock Exchange of this fact, they procured by loan, or otherwise than by sale of shares, a sum of 35,000l., which they paid into the bank, and procured from the bankers certificates, which they enclosed, purporting that the sum in question stood to the credit of the company; and immediately afterwards, when the Stock Exchange had appointed a settling day, the said sum was withdrawn by checks signed by the defendant and others. The plaintiff further proved that the statements in the letter were false to the knowledge of the defendant, and that two-thirds of the scrip had not been paid upon; but that the Exchange Committee acted on the faith of the banker's certificate, and appointed a settling day. The plaintiff saw the shares quoted in the official list, and on the faith of the rule having been complied with, bought the shares from a jobber in the market. The defendant's counsel insisted that there was no evidence to go to the jury, and that there was no proof of any fraud by the defendant, or that the damage, if any, was brought about by such fraud, if any; that the evidence did not show any contract between the plaintiff and the defendant, nor any duty in the defendant as between him and the plaintiff, nor any connection between them in respect of the subject-matter in question, to entitle the plaintiff to recover on the facts proved. The learned judge, however, told the jury that, if the plaintiff was induced by seeing the shares quoted in the official list of the Stock Exchange, to purchase the same, and if the jury believed that the insertion of the said shares in such list was procured by the false and fraudulent representations of the defendant, then the plaintiff was entitled to recover. A bill of exceptions was then tendered, and the jury gave their verdict for the plaintiff, damages, 937. 158. Error being suggested to the Exchequer Chamber, the counsel for the plaintiff in error did not in that court argue the matter, being advised that it would be desirable to bring the case before the House of Lords, and the judgment of the Common Pleas was thereupon affirmed without argument. "The Error was then suggested to the House of Lords, and the plaintiff in error gave the following reasons for reversal in his printed case :declaration does not disclose a matter which is properly the subject of an action by the plaintiff below against the defendant below. That it shows no contract express or implied between them, and no duty as between them, the breach of which can be the subject of an action. That for aught that appears by the declaration John Barclay, the seller of the shares to the plaintiff below, had purchased them from another who had also purchased them under the same circumstances as those disclosed by the declaration relating to the plaintiff; and that if the plaintiff is entitled to maintain this action, any person who had been at any time a purchaser of any one share under the same circumstances would be entitled to maintain a similar action-a proposition for which the defendant submitted there was no authority." In the defendant in error's printed case the following reason for affirming the judgment was given :-"Because a false and fraudulent representation made by A. to the public, calculated and intended to deceive by inducing persons to purchase for value that which is worthless, affords a ground of action against A. to any person who is deceived and who purchases and suffers damage thereby, in the same manner and to the same extent as if the representation had been made directly by A. to such person." C. Clark, for the plaintiff in error, on the case being called, said, that he did not think he could usefully occupy the time of the House by arguing it, and would at once submit to a judgment for the defendant in error. Quain, for the defendant in error. Judgment for defendant in error. INDEX то THE PRINCIPAL MATTERS. (The additional cases in this volume are indexed in [ ].) ACCIDENTAL DEATH. Principle for estimating Damages. 1. In an action founded upon Lord Campbell's ADMITTANCE. AFFIDAVIT. Form of Affidavit under 15 & 16 Vict. c. 76, 8, 17,-See PRACTICE, 1. Under 8. 27,-See from death, legal liability alone is not the 206 AGENT. AGENT. AGREEMENT. See CONTRACT. AMBIGUITY. AMENDMENT. 2. Therefore, where, in an action by a father for Of Case under 20 & 21 Vict. c. 43, s. 2. APPEAL. or for family mourning. Id. TICE, 4. |