pose, gives priority to statutory registered titles and declares that such titles are not to be overridden by equitable titles. That disposes of the case on the statutes. But then it is said that the debenture-holders are entitled to insist on priority on the ground that the mortgagees took with notice of the debentureholders' security. Had the mortgagees then a constructive notice of these debentures which ought to postpone them? On that I have had the advantage of the judgment of Mr. Justice CHARLES, in English and Scottish Mercantile Investment Co. v. Brunton (4). That case lays down no new principle: it is WIGRAM, V.-C.'s, rule in Jones v. Smith (11) in a new dress. [His Lordship read the passage in Jones v. Smith at p. 55, and continued:] It is admitted. that the evidence does not bring the applicants within the first class. Then, had the mortgagees notice that the property was "charged incumbered or someway affected"? As a matter of fact they had notice that there were debentures and that they affected ships, but they had no knowledge that the debentures charged the particular ships mortgaged to them. It is asked why did they not inquire? They did not make inquiries because they were told and believed that the debenture-holders' security did not extend to these ships. have not here a statement of fact, as in English and Scottish Mercantile Investment Co. v. Brunton (4). We have rather a statement of law a statement which might mean that the ships now in question were not included in the debenture-holders' security, or which might mean that if the ships were included yet on the construction of the Merchant Shipping Acts the mortgagees were not affected. I am inclined to think that if the mortgagees did not inquire for what I may call the legal reason, Mr. Alexander might be right. I must not impute dishonest motives if I can help it. Everybody it would seem took it for granted that there was no need to look at the debentures and on that assumption they acted. Accordingly the applicants are entitled in my opinion to what they ask. Solicitors: Gresham, Davies & Dallas, for the Applicants. We Parker, Garrett & Parker, for the Debenture-holders. E. M. BURT, BOLTON & CO. v. BULL & WARD. 1894, Dec. 3. LORD ESHER, M.R., AND LOPES AND RIGBY, L.JJ. Receiver and Manager appointed by Court of Chancery-Personal Liability on Contracts. A receiver and manager appointed by the Court of Chancery is primâ facie personally liable on the contracts into which he enters while carrying on the business. It is the intention of the Court that his personal credit shall be pledged, and though it is possible for him to escape liability by an express stipulation in the contract that the other party thereto shall not look to him for payment, the ordinary rule is that in the subordinate contracts which his position makes it necessary for him to enter into, he pledges no one's credit but his own. Goods having been ordered "for Joseph Bull Sons & Co. (Limited), E. C. Bull and R. J. Ward, receivers and managers," Bull and Ward, being appointed not by the parties, but by the Court of Chancery, are personally liable in an action for the price. APPEAL from Mathew, J., without a jury. A company under the name of Joseph Bull Sons & Co. (Limited), carried on the business of builders and contractors. The company had issued debentures and being in difficulties, in the year 1892, a debenture-holders' action was brought against them. At that time the company had in progress three contracts with the London School Board. On 6 May, 1892, Bull and Bird were appointed receivers and managers by the Court of Chancery, with power to borrow 1,000l., and on 13 May power was given them to raise 4,000l. more, to be a first charge; on 14 May a petition to wind up the company was presented by a creditor, but no winding-up order was ever made. On 1 June an order was made by which the unsecured creditors were given second debentures to give them a voice in the management of the affairs of the company, and a creditors' committee was formed, of which one of the plaintiffs was a member, to make the arrangements for the authorized loan of 5,000l. required for the completion of the school board contracts. Subsequently, J. W. Hobbs was appointed receiver and manager in the place of Bird; and on 22 December, 1892, Ward was appointed to act with Bull and Hobbs, the latter of whom afterwards ceased to act. An order signed "For Joseph Bull Sons & Company (Limited), E. C. Bull, R. J. Ward, receivers and managers" was given to the plaintiffs for certain timber, and he sued the defendants Bull and Ward personally for the price. MATHEW, J., held that the defendants were personally liable, and gave judgment for the plaintiff for the amount claimed. The defendants appealed to the Court of Appeal. Farwell, Q.C., and Beven, for the defendant Bull; Upjohn, for the defendant Ward: The receivers and managers contracted on behalf of the company and are not personally liable. The way in which the order was signed shows that the defendants were agents merely, incurring no personal liability. The order was so accepted by the plaintiffs, who knew all the circumstances of the company, and looked for payment to the fund of 5,000l. which the Court had authorized to be raised. Credit was in fact given to the company. Receivers and managers are in the same position as inspectors under an inspectorship deed, and it makes no difference whether they are appointed by the parties or by the Court. A receiver and manager is under no duty to pledge his personal credit; he is to pledge the credit of the estate, and in this case a special fund is provided with which he is to manage, and to which the creditors are to look. His position is the same as that of the liquidator of a company; the latter is the agent of the company only, and has been held not to be personally liable to the solicitor whom he has appointed in the winding up: In re Anglo-Moravian Hungarian Junction Railway Company, Ex parte Watkin (1). Credit in such cases "is given to the assets of the company," per Lord Justice JAMES. If he does not take up office on the express terms that he shall be personally liable, no such condition is implied. Sargant v. Read (2) is an exception to the general rule, but in ordinary cases, where an outside person is appointed, personal liability is not to be inferred. In appointing a manager, the (1) 1 Ch. D. 130; 45 L. J. Ch. 115; 33 L. T. 650; 24 W. R. 122. Court, to prevent onerous liabilities from being thrown on other people, will forbid their manager to enter into any new contracts involving a liability of more than a specified sum: Taylor v. Neate (3). By signing "for Joseph Bull Sons & Company (Limited)" the managers show that it is the company that must be looked to for payment: Redpath v. Wigg (4). Lawson Walton, Q.C., and C. A. Russell, for the plaintiff : It is a question of fact in each case, and Mr. Justice MATHEW has found as a fact that the receivers and managers here intended to pledge their own credit. It is necessary that a manager should enter into subordinate contracts, he is not the agent of the company or of anyone, and when he carries on the business of the company it is intended that he shall be personally liable on his contracts, unless, when they are entered into, he stipulates that his personal liability shall be excluded. They were stopped by the Court. Farwell, Q.C., replied. Lord ESHER, M.R.: This was an action for goods sold and delivered, the price of certain timber supplied. The building business had gone out of the hands of the company to this extent, that the Court had appointed a manager and receiver of it. What does that mean? It means, says Mr. Justice CHITTY, in Taylor v. Neate (3), that the Court of Chancery has taken the management of the business into its own hands. It is said that a manager appointed by the Court is the agent of the company; but if so, he would be bound to obey the company, which he is not. The company do not appoint and cannot dismiss him. The Court of Chancery appoints and dismisses, and has the right to say what is the proper way of carrying on the business. The company cannot do any of these things, only the Court can do them. The manager is the agent of the Court of Chancery, but, of course, the Court is not liable on his contract, and it is in (3) 39 Ch. D. 538; 57 L. J. Ch. 1044; 60 L. T. 179; 37 W. R. 190. (4) L. R. 1 Ex. 335; 14 W. R. 866. evitable that the agent is appointed to act on his own responsibility. The rule of the Court must be that if a manager, is appointed and accepts the office, the Court is not liable, and the company is not liable, and no one is liable but the manager, who must be taken to have given the orders on his own responsibility. It is not necessary to determine whether he is bound to give such orders, it may be that he can go to the Court and ask whether he should give the orders, and if the Court refuses him protection, I suppose that he is at liberty to resign. He is to make himself personally liable, and what is said by Sir GEORGE JESSEL, M.R., in Sargant v. Read (2), shows that he was of that opinion, and that the fact has been so often proved that the Court will take judicial notice of it. Mr. Justice CHITTY speaks to the same effect in Taylor v. Neate (3). When the Court of Chancery appoints a manager it knows that he must make subordinate contracts in which he can pledge nobody's credit but his own. Let us look at the position of the other party to the contract. If the manager goes to the person who supplies the goods and says: "I am a manager appointed by the Court and I cannot give you the order on the ordinary terms, but only on the terms that you shall be paid if the funds derived from the business are sufficient," and that is accepted, the vendor cannot turn round and rely on the manager's personal credit. There are cases, therefore, in which the order is accepted not on the manager's personal credit; but if there is no express stipulation to that effect the only business inference is that tradesmen look to the personal liability of the manager, leaving him to his right to indemnity out of the estate. The consequences of deciding otherwise would be serious, and no tradesman could contract with a manager without inquiring into and satisfying himself as to the sufficiency of the fund; even the servants would have to make such inquiries. "Receiver and manager" in this order is a legal term which would call the attention of those who received these orders to the fact that the defendants had been appointed by the Court of Chancery to manage the business. As such they gave the order on which this case had arisen, and the plaintiff knew that they pledged their personal credit. The question is one of fact in every case, and it is for the Judge to M.-VOL. II. H |