p. 13

Voyage

INSURANCE (MARINE) Seaworthiness policy - Insufficiency of coal-Ship's fittings, spars, and cargo used for coal-Liability of underwriters. The Greenock Steamship Company v. The Maritime Insurance Company • p. 11 MORTGAGE-Foreclosure-Account — Receiver appointed by mortgagee not in possession-Power of mortgagee or his surety, through receiver, to pay for repairs without direc tion in writing of mortgagee-Conveyancing and Law of Property Act, 1881 (44 & 45 Vict., c. 41), s. 24. White v. Metcalf P. 12 SHIPPING-Collision-Compulsory pilotage-Ship carry, ing passengers-Exemptions- "Constant trader" - Pilotage Act, 1825 (6 Geo. IV., c. 125), s. 59-Order in Council, February 18, 1854. The Cayo Bonito - p. 11

No. 1,927.

RECENT IRISH LEGISLATION.-I. DURING the past two years quite a considerable number of exclusively Irish Statutes have been. passed. We purpose reviewing the more important of these in the present article. Two of the most important have already been fully noticed in our columns-viz., the Licensing Act of 1902 (36 Ir. L. T. & S. J. 339) and the Land Act of 1903.

The Acts dealing more or less directly with Local Government and County or District Councils are six in number. Chapter 3 (1902) provides that a County Council may, if they think fit, exclude any congested district area from contributing to any sum raised by them for the purposes of agriculture or other rural industries, or technical instruction, under the power given them by the Agricultural and Technical Instruction Act of 1899, s. 19. A congested district is one where more than 20 per cent. of the population of a county live in electoral divisions wherein the total rateable value is less than £1 10s. for each individual (54 & 55 Vict., c. 48, s. 36).

Congested districts are again dealt with in the Marine Works Act (1902), c. 24. By that Act, where the construction or repair of a marine work (which includes any physical construction or operation required for or connected with the purposes of navigation), is necessary for the development of any industry or trade carried on by the inhabitants of a congested district county, and it cannot be executed without special State aid, the Treasury is empowered to advance money to the Board of Works to be applied by them in the execution of such works, provided that the County Council contribute annually at least 1 per cent. of the total cost of the work. This contribution is to be paid out of the County or Borough Fund, raised by a poor rate, and is to be applied by the Board in the maintenance of such certified works, and in payment of the salaries of the officials connected with them. The amount of the county contribution may vary under certain specified circumstances, and the Treasury may lease the work or the revenue thereof, tolls, rates, &c., to the Council or to any public department or any person. The work, but not the land on which it stands, is to be free from assessments to local rates for ten years after completion. Existing marine works which are the public property of counties under the Grand Jury Act of 1853, s. 7 (which transferred them to the Grand Juries of counties), may, by agreement between

the County Council and the Board of Works, be vested in the Board and brought under the provisions of the new Act, which contains elaborate provisions as to tolls, rates, rent, byelaws, and harbour constables, very similar to those contained in the Grand Jury Act, 1853.

Chapter 33 (1902) transfers the sum of £5,000 payable annually to the Royal Dublin Society for the improvement of the breed of horses and cattle under 51 & 52 Vict., c. 60, s. 3 (la), to the Department of Agriculture and Technical Instruction (Ireland) for the like purpose. This money is raised out of the probate duties paid in Ireland. Chapter 20 (1902) enables Rural District Councils to adopt the Public Libraries Acts of 1855 and 1894. The latter Act only referred to Urban Districts, and some of its provisions as to taking a poll respecting the adoption of the Act: s. 1 (2-8), and as to the appointment of commissioners: s. 2, are excluded from the new Act, which constitutes the Rural District Council the library authority. They are empowered to strike a rate-presumably not exceeding the one penny rate fixed by the Act of 1855, s. 8to be raised equally over the whole district. They can also enter into agreements with the managers of any school for the use of the school as a library, and of the services of the master as librarian. The County Council can make a grant to assist the Rural District Council in forming and maintaining the library. The Library Offences Act of 1898, an English Statute dealing with persons creating annoyance or disturbance in a library, is rendered applicable to libraries formed under the Act of 1855 (and, therefore, to those formed under the new Act also), and the library authority can make byelaws (under the Libraries Act of 1901), including byelaws dealing with offences under the Act of 1898, which latter class were cluded in the Act of 1901. This power is identical with that conferred on the sanitary authority by the Public Health (Ir.) Act, 1878, ss. 219-225. Where a Rural District Council adopts the Acts the power of the commissioners of any town within the district (not a sanitary authority), given them under the Towns Improvement Act of 1854, to form a public library and raise a rate for its support, apparently no longer exists (ss. 2, 3). If the Rural District Council does not adopt the Acts, the powers of the Town Commissioners remain in full force.

The Local Government Act of 1902 (c. 38), is of considerable length, and effects a very large number of alterations in the law as laid down by the Act of 1898. To attempt to set out all of these in this article would be impossible. We must, therefore, content ourselves with a mere mention of the subjects dealt with in its twenty four sections -Compensation for lands taken compulsorily; contributions to county. infirmaries and fever hospitals; constituting

new urban districts time for payment of debts by councils; remuneration of medical practitioners, nurses, medicines, railway and harbour charges; payments out of local taxation account; remission of surcharges; councils' borrowing; schemes for the collection of poor rate; superannuation of officers; transfer of powers from the Treasury to the Local Government Board; half-yearly meetings of County Councils; days and hours of meetings of Town Commissioners; admission of the Press to meetings; subscription to the funds of the Association of County Councils; insurance against accidents to workmen; acceptance of tenders; applications by aggrieved parties and illegal payments, and audit of accounts.

The remaining Act relating to Local Government is the Light Locomotives Act of 1903 (c. 2), which was passed for the purpose of enabling the motor race to be run in Ireland. It was of mere temporary interest, and expired on the 31st of December last.

ECHOES OF THE COURTS.

The question of the rights of jurors arose again at the Belfast Assizes on a petition presented by a jury there to the Lord Chief Baron. Amongst other matters, the petition stated that the accommodation and the food provided for the jurors who were engaged was of the worst possible description. One of the jurors stated that, if he ever had to stand in a dock, he hoped that he would be tried by well-fed jurors, and not by twelve fierce, hungry, dissatisfied individuals. The Chief Baron agreed with the complaints of the jurors on both points. With reference to the question of food, he stated that the sum allowed the sheriff for providing luncheons for the jurors was one shilling and sixpence per individual, and he considered that sum entirely too small. With reference to the question of accommodation, he promised to forward the memorial of the jurors to the Lord Lieutenant.-Law Times.

BOOKS RECEIVED.

A Practical Guide to the Irish Land Act, 1903 (3 Edward VII., Chap. 37); with an Introduction and useful Tables for the Calculation of Purchase-money within the Zones, &c. By ROBERT M. D. SANDERS, M.E., Dub. Univ., Fellow of the Surveyors' Institute. Dublin: Hodges, Figgis & Co.

A Handbook to the Motor Car Acts; containing the Lig' t Locomotives on Highways Act, 1896, and the Motor Car Act, 1903; the Regulations framed under the Acts by the English, Irish and Scottish Authorities; the Regulations for the keeping of Petrol; the various Cases decided under the Act of 1896; Notes, and an Index. By JAMES O'CONNOR, Barrister-atLaw. Dublin: Mecredy, Percy & Co. 1903.

Rating, Forms and Grounds of Notices of Objection and Appeal, both Outside and Inside the Metropolis. By W. L. L. BELL, Barrister-at-Law. London: Sweet & Maxwell. 1903.

SOME DECISIONS UNDER THE COMPANIES

ACTS 1862--1900.

nominal capital which is received by it intact, or indeed with any money belonging to it” (ibid, supra), at p.

It has been decided that a contract creating an option to call upon shares in a company is not illegal or ultra vires either of the company or of the directors (In re South African Trust and Finance Co., ex parte Hirsch and Co., [1896] 74 L. T. Rep., p. 769), and that such' option shares can be issued even in a winding up' (Hirsch and Co. v. Burns and Another, [1897] 77 L. T., p. 377). In a case brought under the Companies Act, 1900, s. 8, that of Burrows v. Matabele Gold Reefs' Co., [1901] 2 Ch. 23, it was held that a company could not offer an option to underwriters to take further shares, as this involved an application of shares in payment of a commission for subscribing or agreeing to subscribe for shares of the company, and was therefore invalid under that provision. But the decision of the Court of Appeal in this case was not followed by the House of Lords in the subsequent case of Hilder and Others v. Dexter, 71 L. J. Ch. 781, where it was held that a contract by which a company agreed to give certain persons, in consideration of their taking or underwriting its shares, an option at a future date to take further shares at par, did not involve an application of shares in payment of commission for subscribing for shares within the Companies Act, 1900, s. 8,, sub-s. 2, and was therefore not illegal. The object of the action, was to restrain the directors from carrying out the com-; pany's contract. There was no reason to doubt the good faith of the directors, or to suppose they were acting ultra vires. Lord Davey said the question be. fore the House turned on the construction of the words in C. A., 1900, s. 8, sub-s. 2. In Burrows v. Matabele Gold Reefs Co. (ibid, supra), Rigby, L.J., said that the only question to be considered in that case was "the effect and meaning of the same sub-section, styled a general prohibitive clause" by Farwell, J., in the Court below, [1901] 2 Ch. 33 and 26. Lord Davey considered the words "no company shall apply any of its shares or capital money" to naturally mean "apply its capital either in the form of shares or in the form of money derived from the issue of its shares (71 L. J. Ch., at p. 784), and the words "in payment · of any commission, discount or allowance," Lord Davey considered as equivalent "to payment by the Company” (ibid). The words discount or allowance" are synonymous terms, meaning in both cases a rebate on what would justly be due from the subscriber on his shares." The gounds on which Lord Davey allowed the appeal in this case were (1) that the optional shærese were not issued at a discount or allowance, “because the appellant had to pay the full nominal value"; if he exercised his option he would have "to pay twenty shillings in the pound for every pound share.” (2) There was no commission paid by the Company, “fer the Company will not part with any portion of its

64

the argument of the respondent that the chance of the optional shares going to a premium gives the option holder a possible benefit at the expense of the Company. It was this argument that seems to have coninced the Court of Appeal in Burrows v. Matabele Gold Reefs Co. (ibid, supra). Rigby, L.J., observed that he could see nothing in the generał prohibitive subsection "about the nominal value of the shares," saying," when you allot the shares you apply, not their nominal value, but the shares;" "a share is worth tc the Company what it will bring” (Burrows v. Matabele Gold Reefs Co., [1901] 2 Ch., at p. 34). But in the more recent case a totally different view was taken of the value of an optional share. Lord Davey considered that the future value of a share was only conjectural. Lord Brampton calling the entire transaction "a pure speculation" (4 L. J. Ch., at p. 786). Lord Davey concluded if full nominal value of the optional share was stipulated for, the benefit derived by the option holder was not at the expense of the nominal capital of the Company. "Even when shares are actually at a premium in prasenti and not in futuro, Lord Davey said, "I am not aware of any law which obliges a company to issue its shares above par because they are saleable at a premiuin in the market" (ibid, 784). On this view it is curious to note the validity of the original underwriting agreement, Burrows v. Matabele Gold Reefs Co., might be upheld. But Lord Brampton seemed to consider this a ground for impeaching the validity of that agreement in Hilder v. Dexter. It is a question for directors to decide whether they will issue shares above par, and their conclusion must be guided by circumstances. Lord Davey derived satisfaction from the reflection that the decision he was compelled to give in Hilder v. Dexter (ibid, supra) leaves things as they were before the Act of 1900, since that decision did not extend the general prohibitive clause "of the 8th section of that Act" to transactions which were legitimate before the Act of 1900. The law on the subject of issuing shares at a discount, and the payment of commission to underwriters was, previous to the Companies Act, 1900 contained in the two cases of Ooregum Gold Mining Co. v. Roper, [1892] A. C. 125), and Metropolitan Coal Consumers Association v. Scrimgeour, [1895] 73 L. T. Rep. 137. Ooregum Gold Mining Co. v. Roper is considered by Mr. Beaufort Palmer, in his Company Law," to be one of the leading cases in Company Law ("Company Law," p. 349).

Mr. Palmer states the effect of this decision to be that "it is ultra vires for a company under the Companies Acts to issue its shares at a discount, that is to say, on the footing that the holders shall have paid-up shares on payment of less than the nominal value of such shares" (ibid, p. 56). In this case, therefore, the value of a share to the company was its nominal value. But it is this view of the value of a share to the company that was taken by Lord Davey in Hilder v. Dexter (ibid, supra), and it is on this ground that it is possible to make a sharp distinction between the view of the House of Lords in that case and the previous decision of the Court of Appeal in Burrows v. Matabele Gold Reefs Co. (ibid, supra). The possibly wide distinction between the nominal value of a share and its

market value being the rationale of the difference between the two decisions, would seem to warrant the inference that Burrows v. Matabele Gold Reefs Co. must be considered overruled. But the last case was not even referred to by Lord Davey in Hilder v. Dexter, and Lord Brampton considered the two cases were to be materially distinguished, on the ground that in the earlier case the optional shares were allotted at a price below the then market premium value, while in Hilder v. Dexter the price of the optional shares was equal to the market price of the company's shares at the date of the contract for the options. It is submitted that, in Burrows v. Matabele Gold Reefs Co., the guarantors and the company agreed to raise the option price to the then market price, which had risen unexpectedly a fortnight before the action was brought, [1901] 2 Ch., pp. 25--6).

The case of Stephens v. Mysore Reefs (Kangundy) Co., [1902] 86 L. T. Rep. 221, decided that the first clause of the memorandum of association exclusively defines the primary object of a company, and that, consequently, where it stated that the object of a company was to conduct gold-mining operations in Mysore, it was ultra vires of the company to obtain an option on mining property in West Africa. In this case the plaintiff (a holder of both preference and ordinary shares) brought an action for injunction to restrain the defendant company from acquiring the option or mining property in West Africa, on the ground that such proceeding was ultra vires of the company. Eady, J., held that as the primary object of the company was to take over the undertaking in Mysore, the proposed course was ultra vires, and must be restrained by injunction. The Court considered "that every line" of the judgment of Lord Lindley (then Lindley, L.J.) in In re German Date Coffee Co., [1882] 46 L. T. Rep. 327, was “applicable" to the case. Lord Lindley there said: "Care must be taken to construe general words in a memorandum of association so as not to make them a trap for unwary people. General words construed literally may mean anything; but they must be taken in connection with what are shown by the context to be the dominant or main objects. It will not do, under general words, to turn a company for manufacturing one thing into a company for importing something else." This dictum of Lord Lindley constitutes an apt commentary on the maxim quod dolosus versatur in generalibus. In Stephens v. Mysore Reefs, &c. (ubi supra), Eady, J., delivered the following dicta :-(1) A liberal construction ought to be given to subsidiary clauses in the memorandum of association, even when they confer full and ample powers in aid of the main object. But a construction of the memorandum ought not to be accepted which "enables the company to carry on every possible kind of business." (2) The function of stating the primary object is confined to the first clause of the memorandum of association. (3) A company may have more than one object, but its objects must be set forth "in reasonably clear terms, so as to satisfy the Companies Act, 1862, s. 8." (4) "A subsequent clause in the memorandum of association cannot have such a wide effect as to make every precedent clause a separate object of the company "( ibid, supra, p. 222).

The case of In re Fenwick, Stobart and Co., Deep Sea Fishery Company's Claim, [1902] 86 L. T. Rep. 193, decided that when notice of the dishonour of a bill

of exchange is given to the secretary of a company it does not constitute notice to another company, of which he is also secretary, unless it comes to him under circumstances which make it his duty to communicate it. The mere existence of "the common relationship" to two companies imposes no common duty to communicate; it depends on the circumstances of the particular case. In this case Buckley, J., pointed out that information might come to a person who stood in the common relation of "secretary to two companies under such circumstances" as that it involves "a breach of his duty to the one company to communicate it to the other." In this case it was not the secretary's duty to communicate the notice of the dishonour of the bill of exchange. Unless the business of a company is such that it cannot be carried on in the ordinary way without the use of bills of exchange, the directors, primâ facie, have not got the power to draw, accept, or indorse bills in the name and on behalf of the company (cf. "Lindley on Companies," pp. 242--3). "Whether directors, secretaries, or managers of companies have implied power to bind the companies to which they belong by bills of exchange and promissory notes, depends partly on the statutes relating to the privileges of the Bank of England. But where these statutes do not apply, the power depends on the nature of the company" (ibid, supra, p. 242). "The cases appear to go to this, that a corporation may issue bills where the terms of the instrument under which it is constituted authorise, upon a fair construction, the issuing bills, or where the business of the corporation is one which cannot, in its ordinary course, be carried on without bills (Buckley: The Companies Acts, p. 212). George Whitechurch, Ltd., v. Cavanagh, [1901] 85 L. T. Rep. 349; [1902] A. C. 117, constitutes a curious instance of a case where a person, who stood in the common relationship of secretary to a private individual, and also to a limited company, acquired information as secretary to the private person under such circumstances as that, to quote the language of Buckley, J., in In re Fenwick, Stobart and Co., it was his duty to communicate it to the company. The information in this case was a proposed fraud on the company, but the evidence showed that, so far from communicating it, the secretary lent himself to a fraud perpetrated by the person to whom he was secretary on the company, to whom he also stood in that relation. This, however, from the point of view of Company Law, was a minor point. A leading case in law is as synthetic as an early type in palæontology, and the learning of George Whitechurch, Ltd., v. Cavanagh ranges over such extensive topics as the law of estoppel, the function of a managing director, and those of a secretary of a limited company, the essential difference between a certification transfer and the certificate of shares under the seal of the company made primá facie evidence of title by the Companies Act, 1862, s. 31, and the meaning of "protective seizure' in French law. But “the real question may be stated very shortly-Has the appellant Company, George Whitechurch, Ltd., incurred any, and if any, what liability by reason of representations made by its secretary and by its managing director?" (per Lord Macnaghten in George Whitechurch, Ltd., v. Cavanagh, 85 L. T. Rep., at p. 351). The secretary of the company, in order to assist a shareholder in carrying out a fraud, falsely certified that certificates of shares had been deposited with him to meet certain transfers,

when in fact no such certificates had been deposited. The House of Lords decided that the company were not thereby estopped from denying the right of the proposed transferee to be put upon the register of shareholders. Grant v. Norway, 10 C. B. 665, followed, Lord Robertson doubting on this point. The representations of the secretary were in writing and in a common form, and there could be no doubt as to the meaning of his words. The certification transfer the secretary gave ran as follows: "Coupon for preference shares in the Company's office, George Whitechurch, Ltd. (Signed) A. B., Secretary." One in similar form was also given by him for "Y" ordinary shares. Lord James of Hereford considered that, in a certification transfer, the word " coupon" is identical in meaning with "certificate of shares. A certification transfer "is a receipt of certificates," not the share certificates themselves. Lord Brampton observed that "a transfer certification appears in the margin of the transfers" (ibid, supra, at p. 355): it is said to be "in order" or "all right" when signed by the secretary, and the rubber stamp of the company's name is usually

used.

A certification transfer amounts, at the most, to a reasonable assurance to a transferee that "the transferor has or will have the power to make a good title to the shares when the necessity arises" (per Lord Brampton, ibid, supra, p. 355). A certification transfer is no warranty of title (cf. Bishop v. Balkis Consolidated Co., 63 L. T. Rep. 601; 25 Q. B. Div. 512); it is never certified under the company's seal. There is no obligation on a company to certify transfers at all. The certification is not passed by the directors. or brought before the Board. Lord Macnaghten observed that a certification transfer is required to meet the exigencies of business in the Stock Exchange; "it is really out of place in dealings in shares not under the rules of the Stock Exchange' (George Whitechurch, Ltd., v. Cavanagh, [1901] 85 L. T., at p. 352). A certification transfer, finally, is not recognised at all by the Companies Acts, it is not even mentioned in Articles of Association, and its deposit does not form a good equitable charge such as can be created by the deposit of share certificates. This summary of the effect and meaning of "a certification transfer" renders it very easy to understand the decision arrived at by the House of Lords in George Whitechurch, Ltd., v. Cavanagh, that the company was not estopped by certification transfers of its secretary, constituting receipts for certificates which has never been lodged with him. Lord Macnaghten, at the close of his judgment, observed that "no one could believe that any board of directors would alter the register of their shareholders on the faith of a certified transfer without the production and cancellation of the old certificate (George Whitechurch, Ltd., v. Cavanagh, [1901] 85 L. T., at p. 353). In Grant v. Norway, 10 C. B. 665, it was held that a shipowner is not bound by bills of lading signed by the master for goods not received on board. The majority of the House of Lords, in George Whitechurch, Ltd., v. Cavanagh, considered that the effect of certification transfers signed by the secretary for certificates which were never actually lodged in the office, is exactly the same as a bill of lading given under the circumstances that were in evidence in Grant v. Norway. Lord Robertson, on the other hand, considered that the decision in Grant v. Norway, [1851] 10 C. B. 665, was

confined to law about shipmasters and bills of lading. and did not represent the general law.

By the law of Principal and Agent, Lord Robertson considered the company was estopped by the written representation of the secretary in the certification transfers. Lord Macnaghten pointed out that the duties of a company's secretary are well understood; they are of a limited and somewhat humble character" (85 L. T. Rep., at p. 351). "A secretary," said Lord Esher, M.R., "is a mere servant. His position is that he is to do what he is told, and no person can assume that he has any authority to represent anything at all" (Barnett & Co. v. South London Tramways Co., 57 L. T. Rep. 436). Even if a secretary is considered an agent and not a servant, it was pointed out by Lord James of Hereford, in George Whitechurch V. Cavanagh, a secretary of a company who acknowledges the receipt of certificates which were never in his hands, is doing that which his principals never intended or authorised him to do, and an act which is quite outside and beyond his agency, either express or implied" (ibid, 85 L T., at p. 354). In his luminous observations on the liability of a principal for the wrongful act of a servant fraudulently committed. Lord Brampton cited a passage from Lord Bowen's judgment (then Bowen, L.J.), in British Mutual Banking Co. v. Charnwood Forest Railway Co. (18 Q. B. D at p. 717), where the latter pointed out that "except in the overruled case of Swift v. Winterbotham (28 L. T. Rep. 339;- L. R. 8. Q. B. 244), I am aware of no precedent for holding that a principal is liable in an action for deceit for the unauthorised and fraudulent act of a servant, or agent committed, not for the general or special benefit of the principal, but for the servant's own private ends." In George Whitechurch, Ltd., v. Cavanagh, Lord Brampton declared, that the finding of the jury that the secretary committed the fraud for the benefit of the company was incomprehensible, adding : there was not, in my opinion, a scintilla of evidence to support it." It is clear also, from the judgment of Lord James of Hereford in that case, that he considered the secretary acted in no way for the benefit of the company. The alleged estoppel arising from the representations of the managing director in George Whitechurch, Ltd., arose from his comment on the certification transfer, made in the presence of the intended transferee and his solicitor: "I shall be quite satisfied if it is the secretary of the company's signature." It was necessary, Lord Macnaghten observed, to keep the two alleged estoppels distinct and deal with them separately. The oral promise of the managing director about the certification transfer was clearly a totally different thing from the written words of the secretary on the certification transfer itself. In George Whitechurch, Ltd., v. Cavanagh, Lord James of Hereford observed that "there was no intention (on the part of the managing director) to deceive the respondent or to cause him to rely on a supposed state of facts which did not exist" (ibid, 85 L. T. Rep., at p. 354). The House of Lords was unanimous in considering, in the words of Lord Robertson, “that the case as to the representations by the managing director entirely breaks down so that the company could not be estopped by it. It was considered by the House of Lords that the managing director in the promise referred to (supra) “represented that the Company or board of directors would act on the certified