these requirements (as in the present case) were not regarded as in order.

It was argued for the Bank that the executors were estopped from setting up their own title against bonâ fide holders for value, but the Court of Appeal held that there was no such estoppel. Lord Justice Lindley said: "I understand this document as representing in truth that the person entitled to the certificate by transfer, not the mere holder, not the thief, not the person taking from him even bonâ fide for value without notice, but whoever acquires a title to the certificate, is entitled to fill up the blanks and get registered as the holder."

On appeal to the House of Lords, this decision was upheld. It was pointed out that the certificates conveyed no representation to persons transacting business with the broker that he had authority to sell or pledge, or to do more than cause the executors' names to be substituted for that of the deceased in the register of shareholders; since the mere signature as executors did not disclose which of those two things was intended. The representation made by those documents was merely this:-"I tell you the Bank—I have been entrusted with these certificates for only one of two purposes either to sell or to get the names of the owners of them registered in the books of the Company-but I will not explain which."3 An ambiguous document of that kind cannot raise an estoppel. The signature of executors is in itself sufficient notice to cast upon the Bank the duty of inquiring into the extent of the broker's authority. Moreover, the documents not being in order was an additional reason to put the Bank upon inquiry, and to prevent an estoppel being raised in its favour, since it had thus obtained the transfers not in the usual course of business.

Both Lord Watson and Lord Herschell expressed a decided opinion that if the transfers in this case had been signed and delivered to the brokers by the registered owner, (instead of by the executors of a deceased owner) the Bank would have obtained a good title, which he would have been estopped from disputing.5

Estoppel of Company by its Certificates.

Let us now direct our attention more especially to estoppel as affecting companies, and inquire first what is the effect of paying or advancing money on the faith of a certificate issued by a company, representing that the holder therein named is entitled either

138 Ch. D. at 406.

2 Colonial Bank v. Cady and Williams (1890), 15 A.C. 267.

3 See per Lord Halsbury, L.C., ibid. at 274.

See per Lord Watson, ibid. at 280.

5 Ibid. at 278, 285; cf. ante, p. 135.

Estoppel of Company by its Certificates.

159

to the shares or to the amount of debenture stock therein mentioned.

Let us suppose that a person purchases shares on the faith of a share certificate issued by the Company, representing that his transferor is the registered owner. If the Company afterwards refuses to register him, or, having registered him, refuses to treat him as a shareholder, on the ground that his transferor had no title to the shares, he can recover damages from the Company, which is estopped from denying the truth of the representation made by the certificate.1 Again, suppose that a person advances money on the faith of a share certificate issued by the Company, representing that he is the registered owner, and that the shares are fully paid up. If the Company is afterwards wound up, and the liquidator places him on the list of contributories, on the ground that the shares were not in fact fully paid up, he is entitled to have his name removed from the list, the liquidator being (as the Company would have been) estopped from denying that the shares were fully paid up.2

But suppose that a Company, having power to issue debenture stock up to a certain amount, has issued certificates in respect of debenture stock in excess of that amount, and a person has paid or advanced money on the faith of such a certificate. The issue of debenture stock in excess of the Company's borrowing power is clearly an act ultra vires. If the Company decline to recognise the holder's title, on the ground that it had no power to issue the stock, and be sued, can it be estopped by its certificate from denying that the holder is entitled to the debenture stock? This raises a point of great difficulty, and one not free from doubt. Conflicting opinions have been expressed on it, and it does not appear to have been directly decided, but it is submitted that in such a case the Company would be estopped.4

It has been said that such a certificate cannot raise an estoppel,

1 Tomkinson v. Balkis Consol. Co. (1891) 2 Q.B. 614, C.A.; aff. H.L. (1893) A.C. 396; set out post, pp. 165, 166; Re Bahia & San Francisco Ry. (1868), L.R. 3 Q.B. 584; set out ante, p. 148.

2 Bloomenthal v. Ford (1897) A.C. 156, H.L.; set out post, p. 163.

3 Fountaine v. Carmarthen Ry. (1868), L.R. 5 Eq. 316. See ante, p. 110. ↑ In the cases, however, of Weeks v. Propert (1873), L.R. 8 C.P. 427, 436, 439; and Firbank v. Humphreys (1886), 18 Q.B.D. 54, 59, 61, C.A., directors of the companies were held personally liable in damages for breach of warranty of authority to issue valid debentures or debenture stock, on the ground that the plaintiff had no remedy against the company. But it seems doubtful whether the Courts were not contemplating the absence only of a remedy against the company to compel them to place the plaintiff in the position of a debenture holder-not the absence of any remedy against the company, such as the right of a plaintiff relying upon an estoppel to be compensated in damages for loss occasioned by reason of misrepresentation. See the argument in the text, infra.

on the ground that a company cannot be estopped from denying that it has done something which it had no power to do. It is not, however, contended that the Company can be compelled specifically to make good its representation that the holder was entitled to so much debenture stock by registering the actual stock in his name, but the question is whether for failing to make that representation good it cannot be compelled to pay as damages the loss occasioned thereby. The precise representation made was that the holder named was entitled to so much debenture stock, and it is conceived that the Company will be estopped from showing that it was untrue. The other party having believed the representation to be true and acted on the belief induced by it, the company cannot, it should seem, be heard to say: If you had made further inquiry, you would have learned that the statement was untrue.2

3

It is, indeed, open to argument that as the Company itself had no authority to make an over-issue, the directors had no authority to issue such a certificate so as to bind the Company; and, therefore, the representation made by the certificate, being wholly unauthorized, was not in fact a representation by the Company at all; and that the only remedy of a person who has suffered loss by relying upon it is an action for damages against the directors personally for breach of warranty of authority. On the other hand, it may be said that a Company, unlike an individual, cannot act except through its duly constituted agents; that if a certificate is actually signed by the requisite number of officers of the Company, and the seal affixed with their authority, a member of the public, in the case supposed, has no means of knowing that they are exceeding their authority; and that it would paralyze the dealings in such certificates if it were open to the Company to dispute the representations which the certificates make.4

(a) Issue of Certificate procured through Fraud.

An instructive illustration of estoppel is afforded by the case of Simm v. Anglo-American Telegraph Co.5 In that case Burge

1 See Lindley on Comps. 5th ed. 485; 6th ed. I, 671; and Brice on Ultra Vires, 3rd ed. 145; and the dicta there referred to of Bowen and Fry, LL. JJ., in British Mutual Bank v. Charnwood Forest Ry. (1887), 18 Q.B.D. at 718,

719.

2 It is submitted that the reasoning of the Law Lords in Burkinshaw v. Nicolls (1878), 3 A.C. 1004, at 1017, 1021, 1026-1027; Balkis Consol. Co. v. Tomkinson (1893) A.C. 396, at 407, 410, 415; and Bloomenthal v. Ford (1897) A.C. 156, at 162, 168-170, is applicable to the case supposed. This appears to be the view taken by Mr. Justice Buckley in his work on the Comps. Acts, 7th ed. 16.

3 See n. 4, ante, p. 159.

See the judgments in the H.L. referred to in n.2, supra

Б

(1879), 5 Q.B.D. 188, C.A.; 49 L.J., Q.B. 392.

Estoppel of Company by its Certificates.

161

bought some stock in the defendant Company, and received a transfer which purported to be signed by Coates, a stockholder, but which was in fact a forgery. Burge sent this transfer to the Company, who, after making the usual enquiries, registered it. Burge then transferred the stock to Simm, the secretary of the National Bank, and the Company registered this transfer and issued a certificate to Simm, who held the stock as trustee for Burge, subject to any lien the Bank might have on it for advances to him. The Bank made advances to Burge on that security, but these advances had been repaid before the action was brought. The Company having discovered the forgery, refused to acknowledge Simm as a stockholder, or to pay him any dividends.

In an action by Simm and Burge against the Company to recover the purchase money and dividends, as damages for wrongful refusal to recognize Simm as the owner, it was contended on their behalf: 1. that Simm as trustee for the Bank had under the circumstances, as against the Company, acquired a title to the stock by estoppel; and 2, that it was the defendants' duty to keep a correct register, and, having entered Simm on the register, they could not afterwards refuse to acknowledge his right to the stock. The Court of Appeal, however, gave judgment for the Company, based on the following reasons:-(a) as regards Simm, because, although he could have recovered damages on the ground of estoppel, if damage had accrued to the Bank, yet, as the advances had been paid off, that ground failed; and (b) as regards Burge, because no estoppel existed in his favour, as the loss sustained by him had arisen from his having accepted as genuine a forged transfer, and not from relying upon any representation made to him by the Company. Moreover, he had by producing to the Company a forged transfer himself induced them to insert the name of his nominee as owner.

In re Ottos Kopje Diamond Mines,2 Goode bought from Gardner on the 6th April some shares upon the faith of a share certificate issued by the Company certifying that Gardner was the registered owner, and on that day Goode tendered to the Company the certificate and a duly executed transfer from Gardner to himself; but the Company, having learned on the previous day that this certificate had been issued through their secretary's fraud, refused to register the transfer. In an action by Goode against the Company, claiming as damages the value of the shares on the 6th April

3

1 Cf. Re Ottos Kopje Diamond Mines (1893), 1 Ch. 618, C.A.; and Dixon v. Kennaway (1900) 1 Ch. 833; both set out infra; in both of which cases the plaintiff having been damnified by relying on a certificate issued by the fraud of their secretary the company was estopped.

2 (1893) 1 Ch. 618, C.A.

* The motion was so treated by consent; ibid. 622.

M

(since which date it had fallen), it was held that the improper refusal to register afforded the plaintiff a good cause of action, for the Company was estopped from disputing Gardner's title; and that the true measure of damages was the value of the shares on the 6th April; for, although the directors were entitled to a reasonable time to consider a transfer before registering it, they had in fact not taken time to consider, but had instantly refused.

In Dixon v. Kennaway, the plaintiff had purchased shares through Liddell, a broker, who was also secretary of the Company, and she had obtained a certificate which through Liddell's fraud had been duly signed and sealed, he knowing that the shares specified belonged to another. In an action against the Company for damages, it was proved that before obtaining the certificate she had paid her money to Liddell, who was now bankrupt, and that she still held the shares; and it was argued for the defendant Company that, as she had not disposed of her shares, she had not suffered loss by relying on the certificate, and therefore, on the principle laid down in Simm v. Anglo-American Telegraph Co.,2 no estoppel existed in her favour. It was held, however, that as she had been put to rest by the certificate until she could no longer recover against Liddell, she had relied on it to her detriment, and the Company were estopped. If she could have recovered nothing from Liddell at any time after receiving the certificate and had therefore suffered nothing by the delay, she was not entitled to recover damages from the Company, but the onus of proving this lay on the Company, and such proof they had not given.

(b) Certificate representing Shares as Fully Paid Up.

In Burkinshaw v. Nicolls,3 shares in a limited Company were issued as fully paid up, by virtue of a contract not registered as required by the Companies Act, 1867,4 and certificates of these shares as fully paid up. Some of them were afterwards transferred for value to a person who had no notice of any irregularity in their issue, and took them as fully paid up on the faith of the certificates. The Company having been ordered to be wound up, the official liquidator sought to make the transferee liable as the holder of shares on which nothing had been paid. But it was held that, as against a transferee who took the shares without notice that they

1 (1900) 1 Ch. 833, coram Farwell, J.

2 (1879), 5 Q.B.D. 188, C.A., ante, p. 160.

3 (1878), 3 A.C. 1004; affg. S.C. in C.A. sub nom. Re British Farmers,' etc., Co. 7 Ch. D. 533.

✦ S. 25. See now ss. 7, 18, 19, and 33 of the Comps. Act, 1900.