the trading of the said J. M. S. (the grantor), he shall not during the continuance of this security, obtain credit to the extent of 107. without the consent of one of the firms parties hereto (but this clause shall not apply to his dealings or transactions for the purchase of goods from the said firms, and the said J. M. S. binds himself to give the said firms the greater portion of his business); and the said J. M. S. shall keep proper books of account of his said business, and shall permit the said parties hereto, or any of them, or any authorised agent of them or any of them, to enter the premises of the said J. M. S. and inspect the same books at all reasonable times during the existence of this security": Held, that this stipulation was not for the maintenance or defeasance of the security, and that the bill of sale was void. Held also, that the bill of sale was properly attested where the attesting witness was agent of the grantee. Peace v. Brookes REGISTRATION—Assignment for benefit of Creditors-Time LimitExclusion of Creditor or Set of Creditors-Bills of Sale Act, 1878 (41 & 42 Vict. c. 31), s. 4. A deed of assignment for the benefit of creditors which provides that "no creditor whether scheduled under these presents or not shall be entitled to any benefit under these presents unless he shall signify to the trustees his assent to these presents within three months from the date of registration of these presents, he having had actual notice of these presents," is an assignment "for the benefit of the creditors of the person making or giving the same " within the exemption contained in section 4 of the Bills of Sale Act, 1878, and consequently does not require registration. Hadley & Son v. Beedom -Hire-Purchase Agreement-Purchase-money payable by Instalments— Where an agreement is entered into between two parties by which one of the parties agrees to hire an article belonging to the other, paying for it by fixed quarterly instalments, the article to become the property of the lessee upon payment of the last instalment, property in the article does not pass until the full price has been paid, and, therefore, the Bills of Sale (Ireland) Acts, 1879 and 1883, do not give to the lessee's assignee in Bankruptcy any better title as against the lessor than the lessee himself had. Coburn v. Collins distinguished. McEntire & Maconchy v. Crossley. (H. L.) BILL OF SALE GIVEN TO SURETY-Uncertainty-Statutory Form A bill of sale given to secure a surety for a debt of the grantor against loss will, if uncertain in its provisions as to the amount and PAGE 491 47 334 the time of payment, be bad as not in accordance with the statutory form. Hughes v. Little followed. In re Edward Hill, The Official Receiver V. Ellis PAGE 208 II. COMPANY (WINDING-UP) ARTICLES OF ASSOCIATION-Issue of Shares at Discount, 253. See AUDITOR-Liability for Misfeasance-" Officer of the Company -Companies (Winding-up) Act, 1890 (53 & 54 Vict. c. 63), s. 10—Companies Act, 1879 (42 & 43 Vict. c. 76), 8. 7. The auditor of a banking company regulated by the Companies Act, 1879, is an "officer of the company" within the meaning of section 10 of the Companies (Winding-up) Act, 1890, and an order may therefore be made under that section requiring him to make compensation to the assets of the company for acts of misfeasance of which he has been guilty in relation to the company. Dictum of CAVE, J., In re Liberator Permanent Benefit Building Society, disapproved. But semble, there may be companies whose auditors are not "officers" within that section. In re London and General Bank, (No. 2) (C. A.). "Officer of Company "—Companies (Winding-up) Act, 1890 (53 & 54 Vict. c. 63), s. 10. The auditor of a company whose articles are substantially the same as those of Table A. is an officer of the company within section 10 of the Companies (Winding-up) Act, 1890. In re Kingston Cotton Mills Co.. Duties of Banking Company-Report to Shareholders-InformationMeans of Information-Company's Affairs "as shown by the Books"Dividend improperly paid-Liability of Auditor-Operating CauseRes ipsa loquitur-" Misfeasance in relation to the Company"-Companies (Winding-up) Act, 1890 (53 & 54 Vict. c. 63), s. 10-Companies Act, 1879 (42 & 43 Vict. c. 76), s. 7. The duty of the auditor of a banking company regulated by the Companies Act, 1879, is to ascertain and state in his report to the shareholders the true financial position of the company. For that purpose he should examine the books of the company, and is bound to use reasonable care and skill, but not more than reasonable care and skill, to satisfy himself that these correctly represent the state of the company. What is reasonable care and skill is a question of 282 626 i fact, and may depend upon whether there is in the particular case anything to excite suspicion. Full information, and not merely means of information or so much information as is calculated to excite enquiry, must be given to the shareholders. An auditor, therefore, who reports fully to the directors, but does not, expressly or by reference, incorporate in his report to the shareholders all the requisite information, fails in the performance of his statutory duty. But, semble, there may be cases in which for special reasons it would be sufficient for an auditor to make a confidential report to the shareholders, and call their attention to it without publishing it. If the auditor's report to the shareholders improperly states or suggests that there are profits out of which a dividend might be. paid, such report is none the less an operating cause of the payment of a dividend, and the auditor is none the less liable for such payment if improper, because by the constitution of the company a dividend can be declared only by the shareholders in general meeting, and upon the recommendation of the directors. It is not necessary for the liquidator, who seeks to establish such liability against an auditor, to call any of the shareholders to prove that they were in fact induced by the auditor's report to concur in the resolution to pay a dividend. An auditor who makes such a report as aforesaid is guilty of "misfeasance in relation to the company," within the meaning of section 10 of the Companies (Windingup) Act, 1890, and not merely of an act of negligence for which an action for damages may be brought against him. Whether or not a common law action for damages can be maintained against such an auditor jointly with directors who have improperly recommended the payment of a dividend, there is jurisdiction to make an order under that Act against him and them jointly. In re London and General Bank (No. 3) BORROWING-Power to Charge Uncalled Capital-Companies Act, 1862 (25 & 26 Vict. c. 89). The memorandum of association of a limited company stated one of its objects to be "to receive money on loan or deposit or otherwise, and upon any security of the company or upon the security of any property of the company or without giving security," and by the articles of association the total amount to be called up in respect of shares was not to exceed a certain sum except by a special resolution of the company : Held, that the directors had power to create a charge over the whole of the uncalled capital of the company. In re Pyle Works followed. Newton v. Debenture Holders of the Anglo-Australian Investment Finance and Land Co. (P. C.) BROKERAGE FOR ISSUE OF CAPITAL, 579. See Shares. Y Y PAGE 555 246 Stoppage-Building Societies Act, 1874 (37 & 38 Vict. c. 42). Where a building society's rules give members a right of withdrawal, the date at which the rule ceases to operate is primâ facie not the society's insolvency but its stoppage. In re Ambition Investment Building Society, Lark's Case, Abrey's Case CAPITAL-Reduction of-Classes of Shareholders-Founders' SharesExtinguishment-Confirmation by the Court-Companies Act, 1867 (30 & 31 Vict. c. 131), s. 9; Companies Act, 1877 (40 & 41 Vict. c. 26), s. 3. Where, by the constitution of a company, the shares were divided into founders', ordinary, and preference shares, the last class being preferred both as to capital and dividend, and a loss occurred necessitating a reduction of capital, the Court confirmed special resolutions which had been passed with this object, extinguishing the founders' shares, and casting the balance of the loss on the ordinary shares. In re London and New York Investment Corporation Petition for Sanction of Court-Jurisdiction-Dispensing with Proceedings for settling List of Creditors-Companies Act, 1867 (30 & 31 Vict. c. 131), s. 13—Companies Act, 1877 (40 & 41 Vict. c. 26), 8. 4— General Order, March, 1868, rr. 6-14. On a petition under section 13 of the Companies Act, 1867, for the sanction of the Court to a reduction of capital involving a return of capital, the Court has no power to dispense with the settling of the list of creditors required by that section and the General Order of March, 1868. In re Lamson, Store Service Co. In re National Reversionary Investment Co. Practice Exhibiting Minute-book-Alteration of Memorandum of Association. On a petition for reduction of a company's capital or for alteration of its memorandum of association, the minute-book containing the record of the resolution for reduction or alteration, should be made an exhibit to the affidavit in support of the petition, and also a copy of the company's memorandum and articles of association. In re Omnium Investment Co. Profits, &c., 575. See Profits. COMMISSION FOR ISSUE OF CAPITAL, 579. See Shares. CONTRACT WITH COMPANY-Non-disclosure of Directors' Interest in-Director receiving Share of Profit from Contractor-Liability of Contractor-Absence of Fraud. In order to render a person who has entered into a contract with, but who stands in no fiduciary relation to a company, liable to the company for giving a share of the profit he makes out of the contract to one of its directors, fraud must be proved. 607 541 537 313 A director of a company agreed with A. to find a purchaser for an estate which A. had agreed to buy if A. would give him half the profit, and then induced the company to buy the estate without disclosing his interest in the transaction. A. at the time of this arrangement did not know who the purchaser was likely to be, and had no reason to believe, after he ascertained who the purchaser was, that the director had concealed from the company the fact of his sharing in the profit. An action by the company against A. to recover the profit failed. Salford (Mayor) v. Lever distinguished. Lands Allotment Co. v. Broad. CONTRACTS BY RECEIVER AND MANAGER, 94, 115. See COSTS-Shorthand Note of Evidence, 267. See Directors. 221, 276. See Winding-up-Costs. DEBENTURES-Debenture-holders' Action-Costs of "realization ". A company worked a ferry across a river under a licence from the river conservators which reserved an annual payment. A debentureholder's action was brought against the company, and a receiver and manager appointed, who obtained advances from a financial corporation on receipts purporting to give a first charge upon the assets, which advances, along with other money, he applied in preserving the assets. The assets being insufficient to meet all claims : Held, that arrears due under the licence were costs of realization, and as such entitled to take precedence of the other claims; that the costs of preservation could not be treated as costs of realization; and that the advances from the corporation had priority over the debentures. Lathom v. Greenwich Ferry Co. PAGE 470 408 Form of Judgment. In an action by a debenture-holder, suing on behalf of himself and all other debenture-holders, and which is brought on as a short cause, the Court can preface the judgment with a declaration "that the plaintiff and the other holders of debentures issued by the defendant company are entitled to a charge" on the property designated in the debentures as security for the moneys thereby secured, although it cannot declare priorities. Brinsley v. Lynton & Lynmouth Hotel and Property Co. -Declaration of Charge-Winding-up-Consent of Liquidator. Although, according to the practice of the Chancery Division in a debenture-holders' action heard as a short cause, a declaration of 244 |